(4th LD) Finance chiefs of S. Korea, U.S., Japan recognize 'serious' concerns over 'sharp' won, yen depreciation

(ATTN: ADDS more info in paras 17, 25-26; ADDS photos)
By Song Sang-ho

WASHINGTON, April 17 (Yonhap) -- The finance chiefs of South Korea, the United States and Japan acknowledged "serious concerns" over the recent "sharp" depreciation of the South Korean won and Japanese yen during their first trilateral talks in Washington on Wednesday, in a coordinated message to help address growing market volatility.

South Korea's Finance Minister Choi Sang-mok, U.S. Treasury Secretary Janet Yellen and Japan's Finance Minister Shunichi Suzuki issued a joint press statement following the talks -- a follow-up to an agreement from their countries' landmark trilateral summit at Camp David in Maryland in August.

At the summit, President Yoon Suk Yeol, U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida reached the agreement to launch the finance ministers' meeting in a series of outcomes aimed at institutionalizing tripartite cooperation on multiple fronts, including security.

"We will also continue to consult closely on foreign exchange market developments in line with our existing G20 commitments, while acknowledging serious concerns of Japan and the Republic of Korea about the recent sharp depreciation of the Japanese yen and the Korean won," they said in the statement.

The three officials stressed their commitment to continuing cooperation to "promote sustainable economic growth, financial stability, as well as orderly and well-functioning financial markets."

The meeting came as the South Korean and Japanese currencies have weakened amid expectations that the U.S. Federal Reserve could keep its key rates steady and start rate cuts later than anticipated.

Adding to market volatility is growing instability in the security landscape of the Middle East. Iran launched more than 300 drones and missiles on Israel on Saturday, in response to a suspected Israeli strike on an Iranian diplomatic mission in Syria on April 1.

In particular, South Korean policymakers have been seeking stability in the foreign exchange market as the Korean won dipped to an alarming level of 1,400 won per dollar during Tuesday's intraday trading for the first time since 2022 before closing at 1,394.50 won.

Choi, Yellen and Suzuki highlighted their cooperation over China-related issues as well, though they did not mention China by name.

"We emphasize the importance of collaboration to overcome supply chain vulnerabilities and the possible harm to our economies from non-market economic practices of other countries, including economic coercion and overcapacity in key sectors," they said.

They also reaffirmed their leaders' commitment to mobilize financing for resilient supply chains, saying they will work together to that end, including through the Partnership for Resilient and Inclusive Supply-chain Enhancement (RISE).

RISE is an initiative to support low- and middle-income countries in playing bigger roles in the midstream and downstream in supply chains of clean energy products.

Moreover, the three sides affirmed their commitment to utilize and coordinate their countries' respective sanctions tools "to impose costs" on Russia for its war against Ukraine and target North Korea's weapons program.

"We strongly condemn the DPRK's exports to Russia, as well as Russia's procurement of the DPRK's ballistic missiles, in direct violation of relevant U.N. Security Council Resolutions, and call upon them to immediately cease such activities," they said.

DPRK stands for the North's official name, the Democratic People's Republic of Korea.

To better respond to key global challenges, they said they will to work together to evolve the multilateral development banks and strengthen other international financial institutions.

"Reaffirming the importance of ASEAN and Pacific Island countries, we will combine efforts to strengthen their macroeconomic and financial resilience as well as financial integrity," they said, referring to the 10-member Association of Southeast Asian Nations.

"We welcome the progress in the trilateral collaboration among our development finance institutions. We will continue staff level engagement to take these forward."

In his opening remarks, Choi underscored the need for trilateral cooperation to respond to financial volatility that could result from "uncertainties in the real-sector economy," while noting geopolitical tensions have become "more complicated and routinized," continuously impacting the world economy.

"While (we) have put the foremost priority on the effectiveness of multilateral trade, economic security is becoming another policy goal as we experienced supply chain disruptions amid the pandemic and geoeconomic fragmentation," he said.

"Through close dialogue and solidarity among the three countries, we have to strategically respond to supply chain disruptions caused by factors that threaten the stable trade and economic order," he added.

Yellen said that the U.S. "deeply values" its "close" partnerships with South Korea and Japan.

"I see scope to further deepen our cooperation on key shared objectives in the region and globally, such as expanding resilient supply chains, countering economic coercion, and combating sanctions evasion," she said.

Choi came here for the three-way talks, and to attend the gathering of finance ministers and central bank deputies of the Group of 20 nations this week.

Meanwhile, Bank of Korea (BOK) Gov. Rhee Chang-yong said that South Korean authorities have the resources and tools to deal with any volatile moves in the country's currency during an International Monetary Fund (IMF) panel session, according to Reuters.

Rhee was in the U.S. capital to attend the annual meetings of the IMF and the World Bank, as well as gatherings of G20 finance chiefs and top central bankers.

sshluck@yna.co.kr
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