Korea on FX monitoring watchlist

[Anchor]

This is last year's exchange rate.

In January, it stayed in the low 1,300 won range.

Then, on the last day of December, it soared to around 1,470 won.

There were political influences such as the martial law.

What happens to import prices when the exchange rate rises?

If we buy American car parts worth ten thousand dollars, consumers in our country have to pay more in won.

Consumption of American products will decrease, and from the U.S. perspective, exports will become more challenging.

Citing this trade deficit, the U.S. designated Korea as a currency monitoring country in a report released yesterday.

They stated that they will closely monitor Korea's exchange rate policy and strengthen exchange rate surveillance in the future.

What impact will this have on us? Reporter Hwang Hyun-kyu has looked into it.

[Report]

The U.S. Treasury Department has again designated Korea as a foreign-exchange monitoring country, citing two reasons.

One is the significant trade surplus with the U.S.

Last year, it recorded 55 billion dollars, far exceeding the limit set by the U.S.

The current account surplus relative to GDP increased significantly from 1.8% in 2023 to 5.3% last year.

The U.S. suspects that this is due to the Korean government's intervention in the exchange rate, but they believe it hasn't reached the level of currency manipulation, so they will continue to observe.

[Baek Seok-hyun/Economist at Shinhan Bank: "There are regulations that impose disadvantages when designated as a currency manipulator, and being a foreign-exchange monitoring country means they will observe. There are no sanctions or anything like that."]

However, the U.S. has decided to scrutinize currency interventions more closely in the future.

While they have primarily focused on direct market interventions by the government, they will now also monitor government investment institutions like pension funds.

The concern is that pension funds could induce a stronger dollar by purchasing dollars to invest in U.S. stocks, and they may raise issues regarding our National Pension Service increasing overseas investments.

They have also increased the number of qualitative evaluation items that can be subject to arbitrary assessment.

There are suggestions that the evaluated exchange rate could be used as a card in future trade negotiations between Korea and the U.S.

The U.S. Treasury warned in this report that countries caught in unfair exchange rate practices could face tariffs.

This is KBS News, Hwang Hyun-kyu.