By Yoon Ja-young
Staff Reporter
Finance and Economy Minister Kwon O-kyu called for international cooperation against the yen-carry trade, saying the excessive borrowing of yen is increasing uncertainties in the global financial market.
``The yen-carry trade has become one of the major risks in the global financial markets. Because of the carry trade, the yen has weakened significantly recently, moving out of line with Japan's economic recovery,'' Kwon said during the Asia-Pacific Economic Cooperation (APEC) Finance Ministers' meeting held in Coolum, Australia, from Thursday.
Global investors borrow yen at low interest rates in order to invest in higher-yielding emerging markets. The yen-carry trade, however, is often criticized as the source of the weakening yen. The Japanese currency has continued weakening against other currencies despite its economic recovery. Other countries complained their exporters are being damaged by the weakening yen.
Kwon also held two-way talks with the Japanese finance minister Koji Omi and U.S. Treasury Deputy Secretary Robert Kimmitt. The ministers agreed on the need to overhaul voting shares in the International Monetary Fund (IMF). Kwon also sought the two countries' cooperation in attracting the World Expo to Yeosu, Korea's southern port city, in 2012, according to the ministry.
Kwon also discussed a wide variety of issues such as the free trade agreement (FTA) between Korea and the United States and the weakening yen with the World Bank president Robert Zoellick and the senior executive of the IMF, the ministry said.
Participants from 21 APEC countries discussed ways to curb global warming and other energy issues.