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2025-12-17 14:40:25
[Bank of Korea Warns: Continued Weakness Could Push Inflation Higher Than Expected Next Year] 1. The Bank of Korea (BOK) warned on Wednesday that continued weakness in the won could push up inflation next year, exceeding current forecasts. In its semi-annual inflation report, the BOK stated that if the dollar-won exchange rate remains at around 1470 won throughout 2026, consumer price increases could rise to 2% to 2.5%. 2. This warning comes as the won is nearing a 16-year low. On Wednesday, the won depreciated 0.5% against the dollar to 1480.4 won. The BOK believes that prolonged currency weakness will have a "spillover effect" on consumer prices, exacerbating imported inflationary pressures. 3. Furthermore, BOK Governor Lee Chang-yong addressed market stability. He stated that the BOK will ensure that the outflow of dollars triggered by the $350 billion investment fund resulting from the US-Korea trade agreement does not harm the stability of the foreign exchange market. At the same time, he reiterated his call for the National Pension Service, a major market participant, to make greater use of currency hedging tools when increasing overseas investments in order to alleviate pressure on the Korean won exchange rate.
