The nominee for the South Korean central bank governor warns of inflation risks and cautions against excessive fluctuations in the Korean won exchange rate

The nominee for the Governor of the Bank of Korea, Shin Hyun-sung, stated that external uncertainties remain high, with major risks including the ongoing tensions in the Middle East, rising global energy prices, and shifts in policy paths of major economies. He warned that soaring oil prices and the depreciation of the Korean won could drive up inflation and suppress economic growth.

He continued to point out that the price pressures in March could have a greater impact on the economy due to rising oil prices and a weak exchange rate. Although strong semiconductor demand and supplementary budgets provide some support, economic growth is still expected to be below previous forecasts.

However, he downplayed the possibility of stagflation in South Korea, believing that while inflation is bound to rise and economic growth may slow, the risk of prolonged economic stagnation occurring alongside high inflation remains limited. He also warned that the exchange rate of the Korean won should not experience excessive volatility, asserting that sharp or disorderly fluctuations in the won's exchange rate are undesirable