Korea-Japan Currency Swap: Will the Discussions Resume?
– Did the Korean side make a proposal at the Japan-Korea Finance Ministers’ Meeting?
ーThere is no merit for the Japanese sideー
Report from Jura Katsumata’s World View
South Korea’s biggest weakness:
South Korea’s biggest weakness is the depreciation of the won.
At the Japan-South Korea Finance Ministers’ Meeting, the policy is to bring up Japan-South Korea swap talks.
The Japan-Korea swap is a request to resume talks while they were suspended in 2015.
Japan’s policy on this is still unclear.
South Korea’s exports are sluggish, and the won exchange rate has fallen below 1,300 won to the dollar.
“Relief” from Japan is absolutely essential for South Korea.
“Joongang Daily” (June 9th):
On the 29th of this month, the Japan-Korea summit will be held in Tokyo. It seems that South Korea wants to discuss the conclusion of a South Korea-Japan currency swap.
What are the advantages for Japan?
The Korean side misunderstands this currency swap. This is because “they argue that there are merits for the Japanese side as well.”
No advantage for Japan:
Japan’s foreign exchange reserves are second in the world, and its net foreign assets are first in the world. Even if Japan exchanges the Korean won with the yen, it means nothing.
The Japanese Yen is an SDR currency:
The Japanese yen is already an IMF/SDR currency. It is one of the world’s five major currencies and is used as the IMF’s foreign exchange reserve currency.
Currently, five currencies are designated as SDRs: the US dollar, the euro, the British pound, the Japanese yen, and the renminbi.
South Korea’s thoughts:
South Korea is a trading nation with an extremely high dependence on exports.
South Korea will be greatly affected by the global economic downturn. We will continue to suffer from this vulnerability.
By all means, I would like to realize a Japan-Korea currency swap.
The Yoon government in South Korea is pro-Japanese, but if it becomes a leftist government in the future, it will start to be “anti-Japan” again.
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