Korea: When Inflation Returns Through the Currency Channel

ING’s note makes clear that the appointment of Shin Hyun-song is not just a personnel change—it is a shift in reaction function. 

• Shin’s prior emphasis on preemptive tightening and financial stability points to a more hawkish stance from the outset.
• Inflation risk is no longer purely domestic. A weaker won, driven by rising oil prices, is importing price pressure back into the economy.
• Household debt remains elevated, making the system more sensitive to prolonged liquidity.

What stands out is the constraint. Korea is not tightening into strength; it is tightening into vulnerability. Export momentum, led by semiconductors, remains strong.