BANK of Korea governor Rhee Chang-yong said on Wednesday (Apr 17) authorities have the resources and tools to smooth out any volatile moves in the country’s currency.

“Our exchange rate deviated a little bit from what could be justified by market fundamentals,” Rhee said in reference to the South Korean won’s moves in the past few weeks.

Receding expectations of a near-term interest rate cut by the US Federal Reserve caused “a lot of headwinds” for the won, which also felt pressure from declines in the Japanese yen and the Chinese yuan, Rhee said during an International Monetary Fund panel session in Washington.

But he added that the recent exchange-rate market environment was different from that of mid-2022, when the US dollar was rising steadily on expectations of sustained, high US interest rates.

“This time is a little bit different,” with the US dollar’s rise driven more by expectations of a delay in the timing of the Fed’s first rate cut, Rhee said.

Once uncertainty over the US rate-cut timing recedes, the pressure on emerging market currencies will likely subside, he said.

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“I think the impact on the emerging market exchange rate from US monetary policy changes ... will be transitory compared with one and a half years ago,” Rhee said. REUTERS