U.S. and South Korean financial authorities discuss exchange rate stability and investment cooperation plans

The heads of Korean and U.S. financial authorities met and reached a consensus that excessive fluctuations in the won exchange rate are undesirable, with both sides deciding to maintain close consultations on foreign exchange market stability.

According to the Korean Ministry of Economy and Finance on the 19th, Vice Prime Minister and Minister of Economy and Finance Choo Kyung-ho held a bilateral meeting with U.S. Treasury Secretary Janet Yellen at the U.S. Department of the Treasury in Washington, D.C., on the 17th local time. This meeting took place during Choo’s visit to the U.S. to attend the G20 Finance Ministers and Central Bank Governors Meeting as well as the Spring Meetings of the International Monetary Fund and the World Bank. Both sides considered that recent increased volatility in the foreign exchange market could put pressure on trade, investment, and price stability, and decided to continue monitoring foreign exchange market developments.

The consultation also discussed investment cooperation issues. Vice Minister Choo introduced efforts by the Korean government, including the “Special Law on U.S. Investment” formulated through bipartisan consultations last month, to fulfill the Korea-U.S. Strategic Investment Memorandum of Understanding signed between the two countries. In response, Secretary Yellen welcomed the Korean government’s efforts. This was interpreted not just as a simple bill introduction but as a sign that the two countries are strengthening the foundational investment cooperation framework in areas related to economic security such as semiconductors, batteries, and high-end manufacturing.

The two also exchanged views on the recent impact of the Middle East conflict on Korea’s economy and on stabilizing the supply chain of key minerals. Geopolitical instability in the Middle East could impact international oil prices and maritime transportation costs, directly burdening Korea’s energy-dependent economy. Coupled with issues related to securing core minerals needed for electric vehicle batteries and high-tech industries, stabilizing supply chains has become a major policy focus.

Vice Minister Choo explained that the Korean government is actively taking measures, including preparing an additional supplementary budget of 262 trillion won to stabilize livelihoods and the economy. He also conveyed support for the U.S. initiative, as G20 chair this year, to discuss solutions to global growth and imbalance issues. He emphasized that building a foundation for sustainable growth, including investing in human resources through artificial intelligence education to cultivate talent for future industries, is crucial. This trend is likely to make exchange rate stabilization cooperation, strategic industry collaboration, and supply chain responses the core themes of future Korea-U.S. economic negotiations.