U.S. Treasury warns won volatility out of line with Korea fundamentals

Jan. 15 (Asia Today) -- The U.S. Treasury Department said this week that the sharp depreciation of the South Korean won does not reflect the country's underlying economic fundamentals and cautioned against excessive foreign exchange market volatility, signaling a shift in Washington's recent messaging on the currency. In a statement released Tuesday, the Treasury said Scott Bessent, the U.S. treasury secretary, made the remarks during talks Sunday with Koo Yoon-cheol, South Korea's deputy prime minister and minister of economy and finance, who is visiting the United States. Bessent noted that recent movements in the foreign exchange market suggest the won has weakened beyond what would be justified by South Korea's strong economic fundamentals and said excessive volatility is undesirable, according to the statement. The comments were interpreted as an acknowledgment by Washington that the won's recent slide has overshot market fundamentals. The remarks mark a contrast with earlier U.S. Treasury positions that emphasized vigilance against the "artificial weakening" of the won. Analysts in Seoul said the latest language suggests Washington is closely monitoring the pace and scale of the currency's depreciation rather than focusing solely on intervention concerns. Related BOK again holds key rate steady amid weak won, hints at prolonged pause 75% of registered S. Koreans separated from family in North have died, gov't says South Korea adds 193,000 jobs in 2025 as youth, key sectors slump Because the Treasury publicly released the comments just two days after the meeting, some market participants speculated that the remarks may reflect prior coordination with Seoul aimed at calming currency markets. The comments also come amid heightened attention to South Korean corporate investment in the United States, which totals about $350 billion. Analysts said sustained outbound investment has contributed to downward pressure on the won, prompting U.S. officials to underscore confidence in South Korea's economic stability. During the meeting, Bessent described South Korea as a core economic partner in Asia, citing its role in key industries that support U.S. economic growth. He added that smooth implementation of bilateral trade and investment agreements could help strengthen U.S. industrial competitiveness. The talks were held on the sidelines of the G7 critical minerals finance ministers meeting in Washington, where officials discussed global economic conditions and ways to enhance supply chain cooperation. -- Reported by Asia Today; translated by UPI © Asia Today. Unauthorized reproduction or redistribution prohibited.

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