Concerning the Korean currency’s recent decline against the U.S. dollar, an official at the International Monetary Fund(IMF) has said that exchange rate volatility does not pose significant economic challenges to South Korea.

Krishna Srinivasan, director of the IMF's Asia and Pacific Department, presented the assessment on Thursday during a press briefing on the IMF’s economic outlook for the Asia-Pacific region. 

The IMF official said that “exchange rate volatility does not pose significant economic challenges given limited currency mismatches and manageable possible inflation.” 

A currency mismatch occurs when a country’s debt is dominated by a foreign currency while its assets are largely in its local currency. 

Srinivasan added that compared to the past, South Korea does not have a balance sheet mismatch that would cause concern in case of excessive movements in the exchange. 

The IMF official stressed that South Korea’s monetary policy should focus on inflation, saying that it should firmly maintain the tightening mode until inflation comes back to target levels.