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Korea Differs US Stance Over Release of FX Market Intervention Data

Kim Dong-yeonDeputy Prime Minister Kim Dong-yeon, South Korea’s top economic policymaker met with US Treasury Secretary Steven Mnuchin and with International Monetary Fund chief Christine Lagarde recently to discuss how to release its forex market intervention data. Though the meeting did not result in an agreement, the South Korean government announced that it will go forward and use prudence with its disclosures.

Kim Dong-yeon and Lagarde visited the United States for meetings with the G20 financial ministers and the IMF and World Banks. This allowed the three to meet and discuss the specifics of the information disclosure.

ARIRANG NEWS

In a statement, Kim said

The South Korean government is examining how to enhance the transparency of the local foreign exchange market. The government is going to make a prudent decision in view of its potential effects on the local forex market and the economy as a whole.

Kim emphasized that Seoul would follow the G20 agreement and the Trans-Pacific Partnership, as well as listening to advice from various case studies and recommendations by the IMF. Mnuchin was quite positive about the meeting though no agreement was reached, saying that the US government will continue its talks.

Lagarde advised that the release of the forex intervention data would help boost the macroeconomics of South Korea by increasing the transparency of its economic policy, though she admitted that there would be a few side-effects.

United States Not Convinced Over Slow Release

The main difference of opinion between Seoul and Washington is the timing and scope of the data to be released. South Korea prefers releasing the data on a quarterly basis, the interval between each release being three months or less. This follows the joint statement outlined in the TPP agreement. It also would prefer to release only the total purchase and sale values it did in the market.

Washington would prefer an interval of just one month between each release of data. In the past, the US allowed countries that were disclosing their data for the first time to disclose their forex purchases every six months, which was the format that Vietnam and Malaysia adopted.

South Korea’s decision on their forex data release will be announced next month after additional talks with Washington and the IMF. The most likely result will be an independent decision on the key issues that is in Seoul’s favor. Kim hinted that the South Korean government preferred a gradual release and that its stance of minimal intervention has not changed.


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