Economic policymaker also stresses Seoul’s entitlement for market intervention when necessary
South Korea’s chief economic policymaker on Thursday underlined to his US counterpart that the country does not fall under the currency manipulator list, while vowing to keep control over its own foreign currency policies, according to officials.
In a 15-minute phone conversation with US Treasury Secretary Steven Mnuchin earlier in the day, Deputy Prime Minister and Finance Minister Kim Dong-yeon contended that given the trade and account balance figures, Seoul does not qualify for a currency manipulating country as defined by Washington.
While underlining Seoul’s autonomy in its currency policy, Minister Kim also added that the country’s trade indexes fall short of the US currency manipulator designation standards, citing the trade balance and account balance figures from last year.
Deputy Prime Minister and Finance Minister Kim Dong-yeon on Thursday talks with US Treasury Secretary Steven Mnuchin. (Ministry of Strategy and Finance)
“I hope that these factors are properly reflected in the April currency report,” Kim was quoted as saying.
The US Treasury is set to announce its semiannual report on international economic and exchange rate policies, in which it will reorganize its list of currency manipulating states.
While dissuading the US from designating Asia’s fourth-largest economy as a currency manipulator, the minister also suggested that Seoul’s currency policies will not be swayed by external pressure. “While leaving our foreign currency policies to be decided by the market, we will continue to take market stabilizing measures in cases of volatility,” he said.
Last October, Washington included Seoul in its “monitoring list” as the latter met only two out of the three criteria for currency manipulator designation.
One of the key issues of dispute was whether Seoul’s government had excessively interfered in the market to influence exchange rates, a factor which Washington apparently has been inclined to use as a negotiating lever in the ongoing Korea-US Free Trade Agreement revision process.
Last month after clinching a draft of their bilateral trade deal amendment, the United States Trade Representative claimed that the revised FTA will include a side deal prohibiting both countries from deliberately devaluing currencies for trade benefits.
This sparked suspicions here that the Korean government compromised on its foreign currency sovereignty in order to be exempted from heavy steel tariffs.
The Finance Ministry repeatedly claimed that the trade deal and the currency policy talk are unrelated, vowing to address the issue in a firm manner.
The two economic policymakers also pledged to keep close communication over key issues including the upcoming inter-Korean summit later this month and the US-North Korea summit in May, officials said. They are slated to meet over the Group of 20 Financial Ministers’ meeting to be held in Washington next week.
By Bae Hyun-jung (email@example.com