The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
May 20, 2005
South Korea: Never Mind
Boy, you have to stay alert to keep up with the Korean government's thoughts on its foreign exchange policies. Brad Setser and Daniel Drezner both report (here and here) on this from the Financial Times:
The Bank of Korea on Thursday backtracked on its comments that it did not plan to intervene further in the foreign exchange markets, after precipitating a sharp fall in the US dollar overnight.
Currency traders said it appeared that the central bank in fact bought dollar-denominated assets on Thursday morning, less than 24 hours after Park Seung, the governor, told the Financial Times that he did not “anticipate” doing so...
Mr Park’s comments pushed the won up sharply against the dollar in US trading on Wednesday, and it hit 999.5 immediately after the local market opened on Thursday but shortly fell back below the psychologically-important 1,000 mark to close at 1,005.
The central bank on Thursday confirmed that Mr Park had been quoted accurately but it nevertheless released a statement saying that he had been “misunderstood.”
“The Bank of Korea will take necessary measures whenever the currency markets are unstable. Especially, we will not sit idly by if speculative funds come in to exploit a groundless news report,” it said.
Brad asks "what's going on?", and then answers his own question by suggesting that the central bank and the Ministry of Finance are pursuing fundamentally different policies. Drezner concurs:
... there's no way, especially after the February episode, that Park didn't know what the effect of his interview would be on the currency markets.
Maybe, but this wouldn't exactly be the first ever trial balloon floated by a policymaker trying to alter the course of policy, would it? I'm not sure why we shouldn't take the Ministry of Finance at its word:
Even Han Duck-soo, finance minister, last month said that reserves of about $200bn “may be adequate” for South Korea. But on Thursday Mr Han said Korean authorities would continue taking action when the foreign exchange market showed any instability.
“When we see speculative forces and excessive volatility, we will act together with the Bank of Korea through smoothing operations,” he told reporters on the sidelines of a conference in Seoul.
I've said it many times: "Taking action when the foreign exchange markets showed any instability" is what central bankers do, even if reluctantly. The real mystery here is how the unwinding of the reserve accumulation the Koreans clearly desire can be accomplished on the terms they wish.
UPDATE: Global Trader's Diary senses a bureaucratic foul-up. Whatever it was, this is a fair concern:
Probably doesn't mean much over the short-run as traders will just be left ignoring all comments. In the long-run the loss of credibility could really limit the bank's options.
TrackBack URL for this entry:
Listed below are links to blogs that reference South Korea: Never Mind :
A Japanese blogger gets a lot of links, South Korea has no organized crime, China will no longer have human dishes, Pakistan is a globalization leader, Mongolia is a democracy, Syria is shrinking, and more, all on today's Daily Linklets [Read More]
Tracked on May 22, 2005 4:34:25 PM
- Mapping the Financial Frontier at the Financial Markets Conference
- The Tax Cut and Jobs Act, SALT, and the Blue State Blues: It's All Relative
- Improving Labor Force Participation
- Young Hispanic Women Investing More in Education: Good News for Labor Force Participation
- A Different Type of Tax Reform
- X Factor: Hispanic Women Drive the Labor-Force Comeback
- Tariff Worries and U.S. Business Investment, Take Two
- Trends in Hispanic Labor Force Participation
- Quantitative Frightening?
- Are Employers Focusing More on Staff Retention?
- June 2019
- May 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- August 2018
- July 2018
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth