"Exchange Rate at 1300 Won Level," Democratic Party Emphasizes Resuming Korea-US Currency Swap... "Government and Ruling Party Must Stay Alert" (Comprehensive)

Democratic Party Holds 'Exchange Rate Crisis Response Situation Review Field Meeting' on 13th
Kim Tae-nyeon: "Exchange Rate Fluctuations Are Not Temporary but Structural and May Persist, Which Is Problematic"
"Chu Kyung-ho and Lee Chang-yong, Ahead of Meeting with Yellen, Should Also Meet US Congress Members to Help Create a Favorable Atmosphere"
Hong Seong-guk: "Expecting Currency Swap Agreement... Stabilizing Public Anxiety Is Also Important"

[Asia Economy Reporter Oh Ju-yeon] As the won-dollar exchange rate surpasses the 1300 won level, showing instability in the foreign exchange market, both ruling and opposition parties in the National Assembly are united in calling for the prompt resumption of the Korea-US currency swap. The Democratic Party of Korea recently expressed concerns about capital flight due to the weakening won and demanded swift government and ruling party action on 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 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 Livelihood Priority Practice Group's Price Stabilization Task Force visited the KB Kookmin Bank Smart Dealing Room in Yeouido to check the exchange rate situation. Afterwards, they held a meeting with the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori) to discuss measures to respond to the foreign currency liquidity crisis.

At the meeting, Chairman Kim Tae-nyeon said, "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, as well as 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 to Deputy Prime Minister for Economy 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 provided benefits to the US," and added, "We should properly inform that Samsung and Hyundai Motor have invested in the US to facilitate the conclusion of a standing currency swap." He also suggested, "Deputy Prime Minister Choo and Governor Lee should not only meet with the Financial Services Commission during their US trip but also meet with members of the US Congress to help create a favorable atmosphere."

[Image source=Yonhap News]

Chairman Kim stressed, "The important thing is the 'conditions.' If the goal is only to record the contract signing, it could backfire. The Bank of Korea must make every necessary effort to prevent such a situation."

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 in the market to defend the exchange rate, our foreign exchange reserves are decreasing, so the 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 tried to hold a direct meeting, but it was suspended due to the highly confidential nature of the matter. It seems the government is currently working on it, and I hope it will be concluded secretly."

Korea and the US previously concluded currency swaps during the 2008 global financial crisis and the early stages of the COVID-19 pandemic in 2020. The second currency swap was extended three times but ended on December 31 last year. Regarding this, Chairman Sung said, "The Korea-US currency swap ended as relations between the Moon Jae-in administration and the US deteriorated."

In response, Chairman Kim criticized, "This shows a low level of economic policy awareness," and urged, "Please refrain from using unfounded facts as elements of political conflict."

In his closing remarks, Chairman Kim said, "The current situation is a structural and complex emergency crisis, but the government and ruling party seem not to be tense," and pointed out, "If the opposition party first says that the current economic situation is an emergency and calls for cooperation between the ruling and opposition parties, shouldn't the ruling party be grateful?" He added, "Showing the public that the ruling and opposition parties are working together on economic policies would promote national unity and provide psychological stability to economic agents. Continuously blaming economic problems on past governments only reveals one's lack of substance."

He continued, "The Democratic Party is greatly concerned that the foreign policy of the Yoon Seok-youl administration might become a significant burden," and emphasized, "I urge the government and ruling party to carefully consider this and shift to a foreign policy that benefits the economy."

Meanwhile, on the 19th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and Bank of Korea Governor Lee Chang-yong are scheduled to meet with US Treasury Secretary Janet Yellen. Discussions on the Korea-US currency swap to stabilize the exchange rate are expected during this meeting.

[Image source=Yonhap News]

Hong Sung-guk, a member of the Special Committee on Economic Crisis Response, told reporters after the meeting, "The political judgment of the US is very important for the currency swap," and added, "I expect the currency swap to be concluded this time."

Hong said, "There is growing anxiety among the public about whether they need to hoard dollars due to the sharp rise in the exchange rate, so stabilizing this is very important," and emphasized, "There are measures such as the FIMA Repo Facility, which lends cash against US Treasury bonds as collateral. The government should inform the public about these measures to alleviate their anxiety."

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