Deputy ministers of finance and trade co-chair emergency meeting with top export firms including Samsung Electronics, SK Hynix and Hyundai-Kia

Finance ministry's international deputy minister to visit Washington on Friday for talks with US Treasury on exchange rate and investment

Employees work at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Wednesday. [Yonhap]
Employees work at the dealing room of Hana Bank's headquarters in Jung-gu, Seoul, on Wednesday. [Yonhap]

The government moved to stabilize the foreign exchange market Thursday after the won-dollar rate surged past 1,500 won, calling on major export conglomerates to strengthen currency risk management and cooperate in steadying foreign exchange supply and demand. A senior foreign exchange official is also set to travel to the United States this week to brief American counterparts on recent market conditions and discuss measures to stabilize the rate.

The Ministry of Finance and Economy and the Ministry of Trade, Industry and Energy said Deputy Finance Minister Heo Jang and Trade Deputy Minister Moon Shin-hak jointly chaired a meeting Thursday with executives from major export companies, including Samsung Electronics, SK Hynix and Hyundai and Kia.

The meeting reviewed recent foreign exchange market transaction trends and explored public-private cooperation measures to improve the balance of foreign exchange supply and demand, according to officials familiar with the discussions.

The two deputy ministers stressed the outsized role that major export companies play in the national economy and in foreign exchange flows. They noted that growing external uncertainty — including rising oil prices following the outbreak of conflict in the Middle East — has heightened concerns about won volatility.

They also briefed attendees on the progress of a proposed tax code amendment designed to support foreign exchange market stability, and called on companies to help achieve the policy goal of attracting overseas capital into the domestic market and boosting domestic investment.

The companies agreed to cooperate more actively with the government's efforts to stabilize foreign exchange supply and demand, sharing the view that a persistently high exchange rate driven by global factors would ultimately weigh on both corporate performance and the broader national economy.

Moon Ji-seong, the finance ministry's international deputy minister, is scheduled to visit Washington on Friday. He is expected to meet with senior US Treasury officials, and observers inside and outside the government anticipate he will brief the American side on recent foreign exchange market conditions and discuss options for stabilizing the rate.

He is also expected to communicate to US officials that the government is not prepared to tolerate the current weakness in the won and has been taking market stabilization measures.

With the Korea-US Strategic Investment Special Act set to take effect June 18, issues related to direct investment in the United States could also feature on the agenda, analysts said.

The two countries formalized "foreign exchange market stability" in a joint fact sheet issued during tariff negotiations in November last year.

That agreement stated that the two sides had reached a mutual understanding that South Korea's $200 billion direct investment commitment to the United States "should not cause instability in the Korean foreign exchange market," and that Seoul "will not be asked to procure more than $20 billion in any given year."

There is also speculation that the government may use the talks to explore with Washington the possibility of adjusting the timing of US-bound investment in light of the current high exchange rate environment.


oskymoon@heraldcorp.com