Seoul: The governor of the Bank of Korea (BOK) expressed the necessity for a rate hike at a suitable time, emphasizing the central bank's consideration of various factors like inflation surpassing target levels and other financial risks.

According to Yonhap News Agency, BOK Governor Shin Hyun-song addressed the National Assembly, highlighting that the South Korean economy is anticipated to sustain strong growth, driven by the semiconductor industry's positive cycle and reduced geopolitical tensions in the Middle East. Shin stated, "I believe there needs to be a rate hike at an appropriate time," emphasizing the importance of evaluating factors such as above-target inflation, improved economic growth, and ongoing financial stability risks.

Shin further noted that inflation is projected to stay high for an extended period, despite the alleviation of Middle East-related issues, due to the lingering effects of previous cost increases. Regarding foreign exchange volatility, Shin mentioned the possibility of the Korean won appreciating against the U.S. dollar. He explained that the recent depreciation of the won against the dollar was influenced by market expectations of changes in U.S. monetary policy and foreign investors adjusting their portfolios in South Korea.

The governor assured that the nation has sufficient liquidity and does not currently need measures like currency swaps, which are typically employed when liquidity is depleted. Shin remarked, "(Currency swaps) are a measure to supply liquidity when we run out of it. In the current situation, we do not lack liquidity."

Additionally, Shin mentioned that the BOK is focusing on developing policy recommendations from a neutral and long-term viewpoint, addressing structural issues such as low birth rates, an aging population, balanced regional growth, and climate change.