Yoon calls for US cooperation in forex market stability

President Yoon Suk-yeol speaks to U.S. Treasury Secretary Janet Yellen during her courtesy visit to the presidential office in Yongsan, Seoul, Tuesday. Yonhap

Yoon calls for US cooperation in forex market stability

South Korea shows willingness to join price cap on Russian oil

By Nam Hyun-woo

President Yoon Suk-Yul called on US Treasury Secretary Janet Yellen to discuss “a practical way for the two countries to work together to stabilize the foreign exchange market” on Tuesday. The comments are believed to reflect South Korea’s desire to resume currency swaps between the two countries.

According to the Presidential Office, Yun, and Yellen held a private meeting at the South Korean Presidential Office in Yongsan-gu, Seoul when US officials visited here for two days. This is the first time the US Treasury Secretary has visited Seoul since June 2016.

The Secretariat said Yun and Yellen, who chaired the Federal Reserve Board from 2014 to 2018, are discussing an agreement signed during the conclusion of the Korea-US Agreement. May Summit on Close Cooperation in the Forex Market. A Cheong Wa Dae official said Yun “did not specify a currency swap transaction” during the meeting.

However, the president’s comments have been interpreted as expressing his hope of resuming negotiations on a currency swap agreement between the two countries.

In South Korea, the devaluation of the won against the dollar has increased the demand for currency swaps with the United States. The South Korean government and the ruling People’s Power Party said on July 17 that “currency swaps will play a role in preventing the won from further depreciation,” and agreed that the country needs such an agreement.

The currency swap transaction will allow Seoul to borrow dollars against the Korean currency at a pre-agreed rate, increasing the value of the won. The previous currency swap agreement between South Korea and the United States expired in December 2021.

South Korea’s Deputy Prime Minister Choo Kyung-ho reportedly requested the United States to begin talks on resuming the currency swap agreement in a meeting with Yellen.

Both sides have agreed to strengthen cooperation on precautionary measures to ensure the stability of the foreign exchange market.

“Both sides have agreed to have” the ability to implement various cooperative measures such as liquidity facilities as needed, “the ministry said in a statement.

Along with talks on the foreign exchange market, Yoon and Yellen discussed ways to strengthen cooperation between South Korea and the U.S. in bolstering supply chain resilience.

“With various and comprehensive crises threatening the entire world, I hope the comprehensive strategic alliance between South Korea and the U.S. will become stronger so it can develop into an alliance of politics, the military, national security, industrial technology and even economy and finance,” Yoon said during the meeting. “I am convinced that Secretary Yellen`s visit this time will be an opportunity to expand the comprehensive alliance between South Korea and the U.S.”

Contrary to expectations, Yoon and Yellen did not discuss the adoption of additional sanctions against North Korea, according to the presidential office.

The U.S. asked South Korea to take part in placing a price cap on Russian oil and Choo expressed his government’s willingness to do so, saying the cap should be designed to effectively contribute to stabilizing global oil prices and easing inflation.

Yellen’s visit is largely seen as an extension of the Biden administration’s push for “friend-shoring” or the practice of bolstering U.S. trade ties with trusted partners, while avoiding partnerships with countries unfairly using their market advantages, which Yellen said include China.

When visiting LG Chem’s R & D facility in western Seoul, she emphasized the importance of “friend support” and attracted more South Korean business investment to US allies like South Korea, while at the same time Mr. Yeren. In a speech at LG, he said, “a major supply of unreliable countries.”

“Countries like China are not allowed to use their position in the markets for major commodities, technologies and products to disrupt the economy or exert unwanted geopolitical influence.” It is the parent company of LG Energy Solution, one of the world’s largest suppliers of electric vehicle batteries.

In March, LG Energy Solution announced plans to invest 1.7 trillion won ($ 1.29 billion) in Queen to invest in the construction of a new battery plant.

Creek, Arizona Battery Supplier said, however, recently he was “reassessing the timing and scale” of his investment plan due to the won’s downturn and pressure from inflation in the United States.

Against this background, Yellen’s visit to LG seems to have a direction and reaffirmed the company’s investment commitment.

 

Credit/Source : https://www.koreatimes.co.kr/www/nation/2022/07/120_333010.html

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