KOR

KOREA CAPITAL MARKET INSTITUTE

KOR

Research Staff

LEE, Seungho Senior Research Fellow Macro-Financial Analysis

Research Field

Education: Ph.D., Economics, American University, 1996; MA, Economics, American University, 1993; Business Administration, Yonsei Univ. 1989

Professional Experience: Senior Research Fellow, Korea Capital Market Institute, 2011.1~; Senior Economist, IMF(APD), 2006.1~2009.1; Deputy Head, The Bank of Korea, 1989.1~2010.12

Characteristics of Korean won FX markets and the effects of market opening to non-residents Senior Research Fellow LEE, Seungho and others / Oct. 20, 2023

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Foreign Exchange Business of Korea’s Securities Firms: Current State and Implications Senior Research Fellow JANG, GEUNHYUK and others / Jan. 02, 2023

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Need and Directions for Reform of the Foreign Exchange Transactions Act Senior Research Fellow LEE, Seungho / Oct. 24, 2022

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Digital Transformation in Foreign Exchange Trading: Effects and Implications / Mar. 05, 2024: The ongoing digitalization in the global FX market has led to improvements in trading speed and convenience and cost savings, while bringing about a structural shift toward expanding the role of dealer-to-customer transactions. This shift holds following implications for Korea, where the digitalization of FX transactions remains in its early stages. First, domestic banks in Korea should recognize the need for digitalizing FX dealer-to-customer transactions to secure a stable customer base. Non-banking financial institutions should also focus on achieving digital competitiveness in FX trading and brokerage businesses, alongside the development of various FX business operations. Second, the traditional distinction between interbank and dealer-to-customer transactions is gradually blurring, underscoring the need for regulatory and infrastructure improvements to facilitate swift, convenient, and low-cost FX transactions and trading for multiple liquidity providers and customers. Lastly, Korea should enable non-residents to electronically offer quotes based on spot exchange rates to their global clients. This could serve as a catalyst for attracting offshore non-deliverable forward (NDF) traders into its domestic spot exchange market and fostering the digitalization of dealer-to-customer transactions in the FX market.

A Thought on Interest Rate Reversals between Korea and the US, and the Implications / Jul. 25, 2023: The US Fed's steep rate hike has sparked a rate reversal between Korea and the US. The rate reversal–the largest one compared to the past–is expected to persist for a considerable period of time going forward. Accordingly, concerns have been raised about possible capital outflows from Korea. However, the data on equity and debt portfolio flows by residents and non-residents during past rounds of rate reversal in Korea suggest that a rate reversal is unlikely to be a direct cause to capital outflows. However, rate reversals–if they continue further–could increase in the cost of financing foreign capital, which requires preparation. Specifically, costs may arise when residents attempt to hedge exchange risk from their outward portfolio investment by raising foreign capital in the FX swap market, a scenario that did not occur in the past. This needs considering as part of an FX hedging strategy.

A Thought on Downside Risks to the Korean Economy in 2023 / Jan. 17, 2023: As persistent external uncertainties and the threat of stagflation are expected to keep raising interest rates this year, the Korean economy is likely to face financial market strains, owing to rising household debt payment pressures, the spike in corporate financing costs and the decline in property prices. In light of these developments, monetary policy, one of the key pillars of macroeconomic policy, should be geared toward minimizing the real economy’s contraction and sustaining financial stability as well as recovering price stability. In terms of fiscal policy, Korea should expand spending to facilitate private investment and improve productivity in the corporate sector. Also necessary is to maintain fiscal soundness and shore up sovereign creditworthiness in preparation for external uncertainties. Additionally, it needs to bolster international cooperation frameworks in consultation with other economies to better deal with geopolitical risks while stepping up efforts to establish economic security.

Structural Characteristics and Advancement of the Korean Won FX Market / Aug. 09, 2022: Korea’s foreign exchange market has achieved quantitative growth at a slower pace than the demand for foreign exchange transactions. It has a structural characteristic that offshore NDF transactions by non-residents boost foreign exchange volatility. The recent government plan for improving the FX market aims to permit foreign investors to participate in the domestic market and extend trading hours. If the plan is implemented, Korea’s spot exchange market would partially accommodate the demand for NDF transactions by offshore market participants, thereby facilitating liquidity provision and alleviating exchange rate volatility. It is also expected to enhance foreign investors’ confidence in the Korean won FX market. In the medium and long term, Korea should exert continuous efforts for the advancement of the FX market to ensure that the Korean won is freely traded in major global financial hubs.