By Jack Kim

SEOUL (Reuters) -The North Korean leader’s powerful sister said on Thursday that the country has never taken down propaganda loudspeakers and will not do so, calling South Korea’s belief that Pyongyang was responding to its peace overtures a “pipedream.”

Kim Yo Jong, who is a senior official in the North’s ruling Workers’ Party, also said adjustments made to the plan for annual joint military drills by South Korea and the U.S. were a “futile” move that did not change the allies’ hostile intent.

Kim, who officials and analysts believe speaks for her brother, has in recent weeks rebuffed moves taken by South Korea’s new liberal government aimed at easing tension between the two Koreas.

“I am confident that Seoul’s policy towards the DPRK remains unchanged and can never change,” Kim was quoted as saying by KCNA official news agency. DPRK is short for the Democratic People’s Republic of Korea, North Korea’s official name.

South Korea’s military has said it detected moves by the North’s military to dismantle some propaganda loudspeakers directed at the South, following similar moves by the South.

Seoul’s Joint Chiefs of Staff said on Thursday it stood by its assessment of activities it had observed at some parts of the border, adding it was continuing to monitor the situation.

The military’s spokesman Lee Sung-jun said he believed caution was needed when interpreting statements made by the North to avoid being misled and that Pyongyang had often made “claims that are untrue.” He declined to elaborate.

Lee did not directly address a question about a news report that the North had taken down only one loudspeaker out of the dozens it had positioned along the border.

During former President Yoon Suk Yeol’s term, South Korea blasted loudspeaker broadcasts criticising the North’s leadership in a propaganda campaign that angered its rival.

There has been cautious optimism in the South that the North may be responding positively to a policy by President Lee Jae Myung to engage Pyongyang after a period of cross-border tension and even show willingness to return to dialogue.

Kim Yo Jong also said North Korea will not be sitting down with the United States for dialogue, saying reports raising the possibilities of such a development were “false suppositions.”

Hong Min, a senior analyst at South Korea’s Institute for National Unification, said Pyongyang likely anticipated further conciliatory gestures by the South and may be trying to pace the development while driving home leader Kim Jong Un’s earlier vow to permanently break off ties with Seoul.

(Reporting by Jack Kim in Seoul; Editing by Chris Reese, Matthew Lewis and Ed Davies)