A spokesperson for South Korean President Lee Jae-myung, Kang Yu-jung, has reportedly announced that the United States (US) has acknowledged that the country is not manipulating its currency to achieve trade superiority.
This announcement came after the spokesperson expressed in a press conference that both countries had come to an agreement that Seoul does not qualify the criteria for being labeled as a currency manipulator, a classification the US Treasury Department issues twice a year.
South Korean officials concerned about Trump’s $350 billion upfront demand
Earlier in November last year, President Joe Biden’s administration had listed South Korea among countries on the watch list for currency manipulation because of its large current account surplus and significant trade surplus with the US.
Coincidentally, when Donald Trump took office, his administration added South Korea to this list in June.
Washington is mandated to take remedial measures against US trading partners who fail to resolve problems related to their currency undervaluation and trade surplus with the US, per the country’s law from 2015.
Concerning the South Korea-US trade deal, South Korean officials clarified that the trade agreement is unrelated to talks about a currency swap connected to the tariff negotiations that Trump imposed on the country’s products.
A South Korean government official who has served as the Minister of Economy and Finance, Koo Yun-cheol, weighed in on the situation. According to the finance minister, President Lee told Scott Bessent, the United States Secretary of the Treasury, that South Korea needed a foreign exchange swap to back the $350 billion investment it promised during tariff negotiations.
Regarding the situation, Koo highlighted that Bessent is consulting other US officials and will soon update South Korea on their discussion.
On that particular day, Wi Sung-lac, the Director of the National Security of South Korea, stated that Seoul cannot pay the $350 billion upfront as Trump had recently proposed. This was after President Lee cautioned that if the government met US demands without any safeguards, the country would encounter a significant crisis similar to the one in 1997 earlier this month.
Additionally, Koo mentioned that he did not receive any information concerning a Wall Street Journal report suggesting that Howard Lutnick, the United States Secretary of Commerce, discussed increasing the $350 billion investment.
US admits no major trading partners manipulate currencies
Earlier, the US Treasury Department acknowledged that none of the US major trading partners manipulated their currencies during the four quarters ending in December. This confirmed that South Korea, a major US trading partner, did not manipulate its currencies.
However, the department highlighted that it will add nine countries to its monitoring list. This included Germany, China, Japan, South Korea, Singapore, Taiwan, Vietnam, and Ireland and Switzerland, which were recently added. The other seven countries, which were already included, were being watched as Biden’s administration had instructed in November.
This announcement marked the first currency report in six months since Donald Trump resumed office, and the final currency report connected to Joe Biden’s presidency.
For November’s currency report, it also highlighted that none of the US major trading partners had manipulated their currencies in the 12 months leading up to June 2024. Notably, throughout Biden’s four-year term, there were no reported claims regarding currency manipulation.
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