Home » Exchange of information with the U.S. Federal Reserve on currency swaps

Exchange of information with the U.S. Federal Reserve on currency swaps

by archyde

“Theoretically, a situation where there is no need for a swap… If the conditions are not met, there is a side effect if you ask for it”
“Inflation expected to peak in October… The rate of decline due to the depreciation of the won will be slow”
“Changes in the prerequisites for a 0.25%p increase”… Big step possibility preview

On the 26th, Lee Chang-yong, governor of the Bank of Korea, said in relation to the currency swap with the US, “I can say that there is an ‘information exchange’ as Jerome Powell, chairman of the US Federal Reserve, is talking about.”

President Lee attended the plenary meeting of the National Assembly’s Planning and Finance Committee on the same day and answered the question ‘Are the Korea-US currency swaps in progress?’
“The Fed has internal standards for currency swaps,” he said.

When there is a problem of liquidity shortage in the global dollar market, it is supposed to be discussed.

At the time of the last two currency swaps (between Korea and the US), it was not only signed with Korea, but also signed with nine countries at the same time when dollar liquidity was insufficient.

“The Fed is monitoring (the dollar liquidity, etc. if conditions are right),” he added.

Rather than discussing currency swaps between the two countries on a policy basis, it is interpreted to mean that the Fed is examining the dollar liquidity situation and closely sharing this information with Korea.

In addition, Governor Lee said, “Theoretically, there is no need for a currency swap right now,” he said. “The only thing is that it is good to receive a swap because the people are too anxious.” It’s right to talk when it’s near that, but the conditions aren’t right, but if you ask for a swap as if there is something wrong with our country now, there may be side effects and it can be low-key.”

In addition, regarding the extent of the base rate hike that day, Governor Lee suggested the possibility of a big step once again, saying, “The prerequisite for a 0.25 percentage point increase has changed.”

“We expected the Fed’s final interest rate to be 4% at the end of this year, but now it has risen to over 4.4% and the final rate forecast for next year has also been raised to 4.6%,” he said. , will make a decision after closely reviewing the impact on domestic prices and growth, as well as the financial and foreign exchange markets, with the Monetary and Monetary Commission members.”

Regarding inflation, he predicted, “It is expected to peak in October, but the rate of decline due to the depreciation of the won is likely to be slow.”

“Inflation will be affected by foreign exchange rates and economic conditions in major advanced countries,” Lee added, adding, “It will be maintained at a high level of 5% or less until at least the first half of next year.”

/yunhap news

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