Washington: South Korea's foreign exchange (FX) rate policy has emerged as a significant topic in ongoing trade consultations between Seoul and Washington, driven by the persistent weakening of the Korean won.
According to Yonhap News Agency, Finance Minister Choi Sang-mok announced that the currency exchange rate issue is among four major topics slated for discussion in future trade negotiations between the two allies. The other key areas of focus include tariff and non-tariff measures, economic security, and investment cooperation, as outlined by the Ministry of Economy and Finance.
Choi further explained that the finance ministries of both nations will engage in separate consultations concerning the FX policy issue, with working-level talks anticipated to commence shortly. His comments followed a "2+2" trade consultation held in Washington with Industry Minister Ahn Duk-geun, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer. The parties agreed to pursue a comprehensive deal by July 8, coinciding with the end of U.S. President Donald Trump's 90-day pause on "reciprocal" tariffs.
The inclusion of foreign exchange policy represents a relatively new element in the trade discussions, which have predominantly focused on tariffs and investment cooperation in recent months. While specific details from Thursday's talks on exchange rate policy were not immediately disclosed, experts suggest that the U.S. might have expressed concerns over the recent depreciation of the Korean won.
Earlier this month, the won plunged to its lowest level in about 16 years, reaching 1,484.1 won against the U.S. dollar, following Trump's announcement of "reciprocal" tariffs, including a 25 percent tariff on South Korea and a 10 percent baseline tariff on foreign imports. President Trump had previously highlighted "currency manipulation" as a form of "non-tariff cheating" on social media, although Choi clarified that this issue was not addressed during the "2+2" meeting.
South Korea maintains that it has not engaged in currency manipulation. Austin Chang, president of the Institute for International Trade under the Korea International Trade Association, noted that the Trump administration suspects countries of deliberately devaluing their currencies to gain a trade surplus with the U.S. However, Chang argued that this should not be a concern for South Korea, as the country has not intentionally weakened its currency and has no desire for a depreciated won. He attributed the won's devaluation to political factors, including the ouster of former President Yoon Suk Yeol and uncertainties arising from U.S. tariffs.