Korea, US reaffirm commitment to avoiding currency manipulation amid tariff talks

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, left, and U.S. Secretary of the Treasury Scott Bessent shake hands before their meeting at the Permanent Mission of the Republic of Korea to the United Nations in New York, Sept. 24 (local time). Courtesy of Ministry of Economy and Finance

Korea and the United States have reaffirmed their commitment to not manipulate currencies for an unfair trade advantage, as part of their “2+2” dialogue tied to stalled tariff negotiations, the Ministry of Economy and Finance said Wednesday.

The finance ministry said Korea also agreed to confidentially share monthly data on its market stabilization measures with the U.S.

The data will include foreign exchange reserves and forward position details, which Korea currently discloses publicly on a quarterly basis.

The deal was reached during a meeting between Deputy Prime Minister and Finance Minister Koo Yun-cheol and U.S. Secretary of the Treasury Scott Bessent in New York, Sept. 24 (local time).

The meeting was part of broader negotiations involving the top two finance and commerce officials on either side, following a bilateral summit on Aug. 25.

“Korea and the U.S. reaffirmed the fundamental principle of exchange rate policy — that neither side will manipulate the value of its currency to gain an unfair competitive advantage or hinder the effective balance of payment adjustments,” the ministry said in a statement.

The agreement specifies that foreign exchange interventions should only be used to counter excessive volatility or disorderly market conditions, and also must be conducted symmetrically, regardless of whether the currency is appreciating or depreciating.

The finance ministry said the enhanced data sharing is part of “sustained efforts to strengthen mutual communication” and promote transparency in exchange rate policies and their implementation.

“The agreement aligns with the core principles of Korea’s policy — that the exchange rate is determined by market forces, and that stabilization measures are only used in cases of excessive volatility or abnormal market conditions,” the ministry said.

“The two sides plan to maintain close, ongoing communication regarding the domestic foreign exchange market and the operation of exchange rate policy,” it added.

Analysts said that the agreement is significant for two key reasons. First, it could lay the groundwork for Korea to secure an unlimited currency swap arrangement with the U.S. Second, it reduces the risk of Seoul being labeled a currency manipulator by Washington.

Tariff negotiations have been stalled since Aug. 25, with U.S. President Donald Trump demanding a $350 billion “up-front” cash investment from Korea in exchange for reducing tariffs on Korean exports from 25 percent to 15 percent.

President Lee Jae Myung has opposed the U.S. demand, saying that it could spark a crisis similar to the 1997 Asian financial meltdown due to massive outflow of foreign reserves.

In response, Korea has proposed an unlimited currency swap deal with the U.S. to safeguard its foreign reserves — a request that the U.S. has thus far rejected.

“Under the circumstances, Korea’s market stabilization measures and its cooperation in sharing relevant financial data could enhance trust with the U.S.,” said Shin Se-don, professor emeritus of economics at Sookmyung Women’s University. “This trust may help Korea secure a currency swap agreement, currently available only to a select group of countries with major global currencies, such as Japan.”

Regarding the currency manipulator designation, Kim Dae-jong, a professor of business administration at Sejong University, noted that the U.S. shift from quantitative metrics to qualitative evaluation has posed new challenges for Korea.

For two consecutive years, the U.S. has placed Korea on its currency manipulation watchlist, signaling increased scrutiny.

Korea has so far avoided being labeled a manipulator by refraining from large-scale foreign exchange interventions — specifically, avoiding net U.S. dollar purchases exceeding 2 percent of gross domestic product for at least eight of the past 12 months.

However, under the new qualitative criteria, such restraint may carry less weight, increasing the likelihood of being designated a currency manipulator.

“These concerns have become more serious as tariff negotiations have stalled,” Kim said. “But since the latest agreement establishes mutual standards for foreign exchange policy between the two allies, it suggests that as long as Korea adheres to these standards, the risk of being labeled a manipulator remains low.”