'Exchange Rate at 1300 Won' Ruling and Opposition Parties Emphasize Need to Resume Korea-US Currency Swap

Democratic Party Holds 'Exchange Rate Crisis Response Situation Review Field Meeting' on the 13th
Kim Tae-nyeon: "Exchange Rate Fluctuations Are Not Temporary but Structural and May Persist, Which Is the Problem"
"Chu Kyung-ho and Lee Chang-yong, Ahead of Meeting with Yellen, Should Also Meet US Congress Members to Create a Favorable Atmosphere"
Sung Il-jong: "Foreign Exchange Reserves Are Decreasing Due to Exchange Rate Defense, So Currency Swap Is Absolutely Necessary... Hope Government's Ongoing Efforts Succeed"

[Asia Economy Reporter Oh Ju-yeon] As the won-dollar exchange rate surpassed the 1,300 won level, showing instability in the foreign exchange market, both ruling and opposition parties in the National Assembly have voiced a unified call for the prompt resumption of the 'Korea-US currency swap.' The Democratic Party of Korea recently expressed concerns over capital flight due to the weakening won and demanded swift government and ruling party action regarding the Korea-US currency swap negotiations. The People Power Party also emphasized the necessity of concluding the Korea-US currency swap, showing a consensus on preparing measures to respond to the exchange rate crisis.

[Image source=Yonhap News]

On the morning of the 13th, the Democratic Party's Special Committee on Economic Crisis Response and the Price Stabilization Task Force of the Livelihood Priority Practice Group visited the KB Kookmin Bank Smart Dealing Room in Yeouido to assess the exchange rate situation. Afterwards, they held a meeting with the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori) to discuss measures to respond to the foreign currency liquidity crisis.

At the meeting, Committee Chairman Kim Tae-nyeon stated, "The exchange rate situation is serious. The problem is that the depreciation of the won is not a temporary change but could persist structurally," adding, "We must thoroughly prepare for the interest rate inversion phenomenon between Korea and the US and also prepare for the possibility of a sharp rise in the exchange rate due to this inversion."

Chairman Kim also called on the Bank of Korea to strive for the establishment of a 'standing currency swap' and emphasized the need for political cooperation between Korea and the US, addressing Deputy Prime Minister for Economy and Minister of Strategy and Finance Choo Kyung-ho and Bank of Korea Governor Lee Chang-yong, who are scheduled to meet with US Treasury Secretary Janet Yellen next week.

He said, "Countries that have standing currency swaps with the US are those that have benefited the US," and added, "We should properly inform that companies like Samsung and Hyundai Motor have invested in the US to facilitate the establishment of a standing currency swap." He also suggested, "Deputy Prime Minister Choo and Governor Lee should not only meet with the Financial Stability Oversight Council during their US trip but also engage with members of the US Congress to help create a favorable atmosphere."

Chairman Kim stressed, "The important thing is the 'conditions,'" and warned, "If we only aim to achieve the contract signing as a performance, it could backfire. The Bank of Korea must make all necessary efforts to prevent such an outcome."

The ruling party, People Power Party, also holds the position that the resumption of the Korea-US currency swap is essential.

On the previous day, Policy Committee Chairman Sung Il-jong appeared on a radio broadcast and said regarding the Korea-US currency swap negotiations, "Because we have a high exchange rate and the government has been selling a lot of dollars it holds to defend the exchange rate, reducing foreign exchange reserves, a currency swap is absolutely necessary." He added, "When President Biden visited Korea two months ago, I, the US Ambassador, the US-Korea Chamber of Commerce, and the Korea-US Association held direct meetings, but the process was halted due to the highly confidential nature of the matter." He continued, "It seems the government is currently working on this, and I hope it will be successfully concluded in secret."

Meanwhile, on the 19th, Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho and Bank of Korea Governor Lee Chang-yong are scheduled to meet with US Treasury Secretary Janet Yellen. There is speculation that discussions on the Korea-US currency swap for exchange rate stabilization will take place during this meeting.

This content was produced with the assistance of AI translation services.