[2026 Parliamentary Audit] Shin Hyunsong: "Recent Won Strength Reflects Confidence in Korea... Still Weak on an Effective Exchange Rate Basis"

Bank of Korea Governor Shin Hyunsong said the recent decline in the won-dollar exchange rate, reflecting a stronger won, was the result of a reversal of the won's sharp depreciation early this year and increased confidence in the Korean economy. However, he said that despite the won's recent strength, its value on an effective exchange rate basis remained below historical levels.

Shin Hyun-song, governor of the Bank of Korea, answers lawmakers' questions during a comprehensive parliamentary audit of the Ministry of Planning and Budget, the Bank of Korea and others at the National Assembly on the 23rd. 2026.10.23 Photo by Yoon Dongju

At a parliamentary audit by the National Assembly's Finance and Economy Planning Committee on the 23rd, Governor Shin responded to a question from Ahn Do-geol, a lawmaker from the Democratic Party of Korea, about the factors behind the won's recent appreciation. "Part of the high exchange rate at the beginning of this year has been reversed, and I believe confidence in Korea is now strengthening," he said.

When Ahn said that export competitiveness and the large current account surplus were supporting the won's strength, Governor Shin replied, "Those are also factors." He added that the stronger won could help stabilize import prices and contribute to a recovery in domestic demand, saying, "It helps a great deal."

He did not give a specific forecast on whether the won-dollar exchange rate would remain in the 1,300-won range or fall further into the 1,200-won range. However, Governor Shin said, "Rather than naming a specific level, historically speaking, the won is still somewhat weak," adding, "Especially on an effective exchange rate basis, it is still somewhat weaker than its historical level."

The effective exchange rate reflects the won's real value compared with the currencies of several other trading partners. At a press conference following the Monetary Policy Board meeting on Oct. 22, 2026, Governor Shin also said the Bank for International Settlements' (BIS) effective exchange rate stood at 89 at the end of August, when the won-dollar exchange rate was above 1,400 won per dollar, below its long-term average of 101. He said this indicated that the won was weaker than usual.

Meanwhile, regarding the Korean economy's medium- to long-term growth potential, Governor Shin said, "Total factor productivity will drive future growth." He said productivity gains from the AI and digital transformation would lead the domestic economy, as declining labor input due to a low birthrate and an aging population coincides with increased capital input from investment in advanced equipment, including semiconductors.

This content was produced with the assistance of AI translation services.