The United States Department of the Treasury and the Ministry of Economy and Finance of the Republic of Korea have agreed to maintain close consultations on macroeconomic and foreign exchange issues. Both countries reaffirmed their commitment under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system for purposes such as preventing effective balance of payments adjustment or gaining an unfair competitive advantage.
In a joint statement, both governments outlined several points of agreement. They stated that any macroprudential or capital flow measures will not be used to target exchange rates for competitive reasons. Additionally, government investment vehicles investing abroad will do so for risk-adjusted return and diversification, not to influence exchange rates competitively.
The statement also addressed potential intervention in foreign exchange markets. It noted that such interventions should only occur to address excessive volatility and disorderly movements in exchange rates. The expectation is that this tool would be considered equally appropriate whether addressing volatile depreciation or appreciation.
Transparency was highlighted as a key principle. “The United States and Republic of Korea agreed on the importance of transparent exchange rate policies and practices,” according to the statement. Both countries committed to exchanging information about any foreign intervention operations monthly, aiming to enhance communication and monitor developments in foreign exchange markets.
They further agreed to publicly disclose data on foreign exchange reserves and forward positions every month following the IMF’s Data Template on International Reserves and Foreign Currency Liquidity. The currency composition of foreign exchange reserves will also be made public annually.
