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BOK governor nominee calls for supplementary budget as Iran war impacts Korean economy

Published: 31 Mar. 2026, 10:54 Updated: 31 Mar. 2026, 15:23

Shin Hyun-song, nominee for governor of the Bank of Korea, answers reporters’ questions on March 31 as he arrives at Hanwha Investment and Securities Plaza on Sejong-daero in Jung District, central Seoul for confirmation hearing preparations. [NEWS1]

Shin Hyun-song, the nominee for governor of the Bank of Korea (BOK), conveyed that a supplementary budget is needed as the Iran war adds to strains on the Korean economy.

“The biggest risk facing the Korean economy right now is the situation in the Middle East,” Shin said Tuesday, speaking to reporters as he arrived at Hanwha Investment and Securities Plaza in Jung District, central Seoul, for confirmation hearing preparations.

The dollar-won rate opened at 1,519.9 in the Seoul foreign exchange market at around 9 a.m. on Tuesday, weakened by 4.2 won from the previous session. As of 1:20 p.m. on Tuesday, the exchange rate was at 1,533.9, with the Korean currency weakened by 16.4 won from a day earlier.

In overnight London trading, the rate had jumped as high as 1,521.1, renewing its post-global financial crisis high.

“I am concerned about external risks in a situation where the exchange rate is high," Shin said regarding the won's depreciation. "But because dollar liquidity is currently abundant, I am not overly worried about the level of the exchange rate itself.”

Shin pointed to a prolonged Iran war as the biggest risk factor for the Korean economy. “Higher oil prices are creating inflationary pressure, and there are downside risks to growth,” he said. “The situation is highly uncertain, both in terms of how it will unfold and how long it will last.”

Amid heightened geopolitical anxiety, West Texas Intermediate crude for May delivery rose 3.25 percent to settle at $102.88 a barrel, its highest level since July 2022.

Shin was cautious about discussing what monetary policy response the Bank of Korea should take if the Middle East crisis drags on. “Because central banks’ monetary policies are interconnected, we also have to watch the policy paths of other advanced economies," he said.

“Whether I am a hawk or a dove is not important,” said Shin, when asked about assessments that he has strong hawkish leanings and favors tight monetary policy. “I will respond flexibly depending on the situation.

Meanwhile, Shin expressed his respect and gratitude to Gov. Rhee Chang-yong. As for whether he would continue the forward guidance policy stance championed by Lee — the central bank’s practice of explicitly signaling its future policy direction to the market — Shin said he would "discuss the matter later with members of the Monetary Policy Board."

Shin’s confirmation hearing preparation team plans to submit the request for a confirmation hearing to the National Assembly once preparations are complete. Rhee’s term ends on April 20.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY CHO MUN-GYU [[email protected]]