S. Korea's currency remains below pre-crisis level: IMF

The South Korean currency has appreciated markedly over the past few months but its value still remains lower than the pre-financial crisis level, the International Monetary Fund (IMF) said Friday.

South Korea's won has appreciated about 6.5 percent against the greenback since the start of this year, raising concerns that the strong currency could hurt the nation's export-driven economic growth.

"The real effective exchange rate has appreciated 2.1 percent from end-2010 through June 2011, but still remains below the pre-crisis levels and its 2000-07 average," the IMF said in a report posted on its official Web site. The effective exchange rate is the figure adjusted for inflation.

The report contains the IMF's analysis of the overall Korean economic situation based on its annual meeting with Seoul government policymakers in June.

As for the nation's foreign currency market, the IMF said that South Korea's strong growth and a "one-way market" bet on the currency have led to large inflows of capital, boosting equity prices close to an all-time high.

It also added that the nation's external short-term debt maintains below pre-crisis peaks, though their flows accelerated recently.

Regarding the nation's monetary policy, the IMF said that it still remains "accommodative" despite its rate hikes of cumulative

125 basis points since July 2010. The rate currently stands at 3.25 percent.

Subir Lall, Korea division chief in the IMF's Asia and Pacific Department, said in an interview with Yonhap that the nation's "neutral" policy rate in the long term is 4 percent.

The IMF, meanwhile, kept its previous prediction that the Korea economy will grow 4.5 percent and 4.2 percent in 2011 and 2012. It also confirmed its earlier annual inflation outlook for Korea at 4.3 percent. (Yonhap News)