S. Korea, Japan finance ministers express deep concern about rapid currency depreciation in both countries - S. Korea ministry

South Korea and Japan’s finance ministers have expressed deep concern over the rapid depreciation of their respective currencies against the U.S. dollar, citing heightened global economic volatility and geopolitical tensions. During the ninth Korea-Japan Finance Ministerial Dialogue on June 25, 2024, Deputy Prime Minister Choi Sang Mok and Japanese Finance Minister Shunichi Suzuki reaffirmed their commitment to coordinated policy responses to stabilize exchange rates and safeguard economic growth. The won and yen have weakened significantly amid surging U.S. interest rates, geopolitical risks, and Middle East tensions, which have exacerbated foreign exchange market instability.

The ministers emphasized the importance of bilateral cooperation, including the reinstated currency swap agreement, to strengthen regional financial resilience. They also aligned with trilateral discussions involving the United States, where Japan’s Finance Minister Satsuki Katayama highlighted urgent monitoring of yen movements and close dialogue with Washington. The U.S. dollar’s strength, driven by high inflation and delayed rate-cut expectations, has compounded pressures on Asian currencies.

Economic impacts of prolonged depreciation include rising import costs for energy and food, squeezing household budgets and small businesses. However, weaker currencies may benefit Japanese and South Korean multinational corporations through higher repatriated profits and tourism revenues. The ministers’ statements underscore a balancing act between mitigating short-term vulnerabilities and leveraging potential long-term gains in global trade dynamics.