On October 1 at 9:15 a.m. KST (September 30 at 8:15 p.m. EST), the Ministry of Economy and Finance of Korea and the U.S. Department of the Treasury announced an agreement between the two governments on foreign exchange (FX) policy. This agreement was prepared following a series of senior- and working-level consultations between the Korean and U.S. financial authorities, separate from tariff negotiations, after FX issues were included on the agenda of the 2+2 Trade Talks held in Washington, D.C. on April 24 at the request of the U.S.

Foreign Exchange Policy Agreement (Full Text)

As trusted partners, the United States Department of the Treasury and the Ministry of Economy and Finance of the Republic of Korea agreed to continue their close consultations on macroeconomic and foreign exchange matters. The United States and the Republic of Korea reconfirmed they have undertaken under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.

In addition, they agreed that:

• any macroprudential or capital flow measures will not target exchange rates for competitive purposes;

• government investment vehicles invest abroad for risk-adjusted return and diversification purposes, and not to target the exchange rate for competitive purposes; and

• in cases when intervention in foreign exchange markets may be considered, it should be reserved for combatting excess volatility and disorderly movements in exchange rates, with the expectation that    this tool would be considered equally appropriate for addressing excessively volatile or disorderly depreciation or appreciation. 

The United States and Republic of Korea agreed on the importance of transparent exchange rate policies and practices. Both countries commit to exchanging any foreign intervention operations on a monthly basis as part of their continued efforts to enhance communication and monitor foreign exchange market developments and stability. They also commit to public disclosure of:

• foreign exchange reserves data and forward positions according to the IMF’s Data Template on International Reserves and Foreign Currency Liquidity on a monthly basis; and

• the currency composition of foreign exchange reserves on an annual basis.

Please refer to the attached files.