Deputy Prime Minister for economic affairs and Finance Minister Kim Dong-yeon underlined that South Korea does not intervene in foreign exchange markets, seeking to ensure that the country continues to stay out of the US-designated currency manipulator list, according to ministry officials.
Minister Kim met with his US counterpart Treasury Secretary Steven Mnuchin on Saturday, on the sidelines of the Group of 20 Finance Ministers Summit in Washington DC, to discuss pending issues including North Korea, the Korea-US Free Trade Agreement and the upcoming US report on currency manipulation.
This was their first official face-to-face talk since Kim took office in June, as well as their third encounter, following the Korea-US-Japan trilateral summit in Germany’s Hamburg in July and the Korea-US bilateral summit in New York in September.
South Korea‘s Deputy Prime Minister for economic affairs and Finance Minister Kim Dong-yeon (left) meets with his US counterpart Treasury Secretary Steven Mnuchin in Washington DC on Saturday, local time. (Finance Ministry)
“(The South Korean) government does not artificially intervene in the (foreign exchange) market,” Kim told Mnuchin.
The US Treasury is set to make its biannual announcement on the list of currency manipulating countries as early as of Monday. The measures used to designate a manipulator are whether a country runs a sizeable surplus in trade with the US, whether its current account surplus exceeds 3 percent of its gross domestic product and whether it spends more than 2 percent per year on purchasing foreign assets to keep its currency low.
While South Korea meets the trade surplus and current account surplus requirements, it is Minister Kim’s claim that no artificial intervention occurred in the market.
The trade surplus, too, dipped some 30 percent this year, the ministry quoted Kim as saying.
As the presidential office Cheong Wa Dae noted, the possibility is low that the US government may designate Korea as a manipulator but the finance minister’s precautious move came amid US President Donald Trump’s escalating gesture for trade protectionism.
“The two financial leaders have reconfirmed the economic and financial partnership, based on a strong alliance of the two countries,” the ministry said through a release.
“We have also made ourselves clear that Korea has not manipulated its currency.”
Expressing common concerns over Pyongyang’s nuclear and missile provocations, Kim and Mnuchin agreed to enhance policy coordination to respond to the increased financial volatility due to North Korea.
Reflecting the priority of the North Korean issue, Under Secretary for Terrorism and Financial Crimes Sigal Mandelker also attended the occasion, along with Under Secretary of the Treasury for International Affairs David Malpass, according to the Finance Ministry.
The top financial officials also exchanged views on the ongoing moves to revise the terms of the bilateral free trade deal.
While both consented on the advantages of the FTA, Kim stressed that the renegotiation should take place in a way “to achieve mutual balance of interest,” suggesting that South Korea is determined to guard its ground against US pressure.
Minister Kim departed for Washington DC last Wednesday to attend the G-20 ministerial summit, as well as the annual meeting of the International Monetary Fund and the World Bank. He was accompanied by the Bank of Korea Gov. Lee Ju-yeol and is to return back home on Monday.
During his six-day stay, the finance minister met with Adam Posen, president of Peterson Institute for International Economics, the chiefs of the top three credit rating companies -- Moody’s, Standard & Poor’s, and Fitch -- and several foreign counterparts.
By Bae Hyun-jung (email@example.com