On January 14, U.S. Treasury Secretary Scott Bessent publicly remarked on the recent weakening of the Korean won, pointing out that the currency's depreciation was inconsistent with South Korea's solid economic fundamentals. This statement followed a meeting with South Korean Finance Minister Koo Yun-cheol, where both officials addressed the won's performance and broader economic cooperation.
Following Bessent's comments, the won experienced a sharp recovery, appreciating as much as 1.15% to 1,462.0 per U.S. dollar. This rebound came after the currency had declined steadily over ten sessions, reaching its lowest level since December 24. The U.S. Treasury emphasized that excessive volatility in foreign exchange markets is undesirable and reiterated South Korea's vital role as a partner, given its strong economic output and key industries that support the U.S. economy.
During their meeting on Monday, the two officials also discussed the significance of critical minerals and explored avenues to expand economic collaboration. Secretary Bessent highlighted on social media platform X that the won's current depreciation does not correspond with the country's fundamental economic strength.
Similarly, the South Korean finance ministry confirmed that the meeting involved discussions about foreign exchange market conditions. Earlier in the day, Minister Koo vowed to implement measures aimed at curbing increasing volatility in the domestic currency market and addressing imbalances in dollar demand and supply. These remarks were made during a virtual forum in Seoul focusing on foreign exchange policies.
In November, Seoul and Washington finalized a trade agreement that reduces U.S. tariffs on imports from South Korea. In exchange, South Korea committed to investing $350 billion in U.S. strategic sectors. This agreement was reached after several months of negotiation, particularly regarding the foreign exchange implications of the investment framework.
The Treasury Department confirmed that Bessent expressed optimism about the smooth implementation of the trade deal during his discussion with Minister Koo, emphasizing the importance of its full and faithful execution.