Lee: Exchange rate in the mid-1,500 won range is too high for fundamentals... 'Keep the oil price cap system'

[Financial News] President Lee Jae-myung said on the 23rd that the oil price cap system should be kept in place more boldly and that the cap should also be lowered.
At the State Council of South Korea and Emergency Economic Review Meeting he chaired at the Blue House that day, Lee asked, "If excess tax revenue is expected from semiconductors and other sectors, then lowering the fuel tax would not place a major burden on public finances and would also help expand the spending power of ordinary people, right?"
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol replied, "We will also lower the cap and, if necessary, review other policy alternatives as well."
Lee then said, "Minimize the burden of rising prices on ordinary people," and asked again, "For example, if we want to add more income support policies for ordinary people now, do we not have the resources?"
He also noted, "Inflation is high and polarization is severe," adding, "Income inequality is severe as well, and the stock market is also becoming somewhat polarized as only large blue-chip stocks rise sharply. We need to study income support measures."
On the strong won issue, he assessed that "the mid-1,500 won range is far too high compared with fundamentals."
Lee explained, "When conditions in the South Korean stock market improve, foreign buying should come in and supply dollars. But now it is the opposite. As stocks have risen too sharply, foreign positions have increased, and the management position for Korean assets has grown, so we are in a situation where we need to reduce it." He then asked, "Is this more of a short-term issue than a structural one?" Koo answered, "Yes."
Lee said, "The point at which foreign investors' so-called rebalancing comes to an end is the point at which the sharp rise in stock prices stops," adding, "In the end, this is also part of the normalization process, and it is a matter of time."

cjk@fnnews.com Choi Jong-geun Reporter