Top economic policymakers from Korea and Japan agreed on Tuesday to take “appropriate actions” to curb the excessive volatility of their currencies and enhance bilateral and multilateral cooperation on broader economic, financial and social issues, Seoul’s finance ministry said. The two parties reached a consensus during the ninth Korea-Japan finance dialogue between South Korea’s finance minister Choi Sang-mok and his Japanese counterpart Shunichi Suzuki in Seoul.
Korean won, Japanese yen weaken significantly
Korea and Japan’s currencies have weakened significantly against the U.S. dollar in recent months. The Korean currency ended at 1,387.5 won against the U.S. dollar, staying near the closely watched level of 1,400 won. Meanwhile, the Japanese yen has neared the 160 line against the U.S. dollar, a level unseen in decades.
According to Korea’s Ministry of Economy and Finance, Korea and Japan’s ministers shared “serious concerns about the recent sharp depreciation of the Korean won and the Japanese yen”. Moreover, they recognized the importance of “remaining vigilant” in policy actions to support economic growth and ensure financial stability. “They reaffirmed that they continue to take appropriate actions against excess volatility and disorderly movements in exchange rates,” the ministry said in a release.
Read | Tax reforms, improved power sector to boost investment in Dominican Republic: IMF
Japan to hike rates
In addition to the decline in Korea’s won, the yen has been struggling against the dollar since the Bank of Japan (BOJ) this month disappointed investors by not reducing its massive bond purchases, as some had expected.
The BOJ kept interest rates steady around zero this month. However, it has been signalling its quantitative tightening plan in July which could be even bigger than market expectations. The plan may also include an interest rate increase.
For more economy news, click here.
