Finance ministers to act on won, yen depreciation concerns

(From left) Suzuki Shunichi, Japan’s Minister of Finance; Janet Yellen, U.S. Secretary of the Treasury; Choi Sang-mok, S. Korea’s Minister of Economy and Finance. [Photo by Yonhap]

The finance ministers of South Korea, the United States, and Japan acknowledged serious concerns over the recent “sharp” depreciation of the South Korean won and Japanese yen against the dollar during their first trilateral talks in Washington on Wednesday.

The Korean won is expected to be highly volatile due to the strong dollar and expectations of annual payouts of stock dividends in April 2024.

Following the talks, South Korea‘s deputy prime minister and Minister of Economy and Finance Choi Sang-mok, U.S. Treasury Secretary Janet Yellen, and Japan’s Finance Minister Shunichi Suzuki issued a joint statement on Wednesday.

“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,” the statement said.

The statement also hinted at further cooperation over China-related issues, though it did not mention the country by name, saying, “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.”

The depreciation of the Korean won against the dollar slowed following the joint statement. As of Thursday, the won touched 1,372.9 won ($0.99) against the dollar, up 13.9 won compared to the previous day. The factors behind the recent depreciation include concerns about a potential delay in U.S. rate cuts and geopolitical tensions in the Middle East between Iran and Israel.