Gov’t agrees to disclose its interventions in currencies

Seoul will disclose its interventions in the foreign exchange market on a quarterly basis starting next year, the country’s top economic official said Thursday.

The Korean government decided Thursday that it will disclose its interventions biannually for a year before posting details on a quarterly basis starting in the second half of 2019 to give the market time to adapt to the changes.

Intervention records for the second half of 2018 will be posted in March 2019 and for the first half of 2019 in September 2019, according to a timeline provided by the Ministry of Strategy and Finance on Thursday. Records for the third quarter of 2019 will be published in December of that year.

“It’s true that the nondisclosure of foreign exchange market interventions has raised unnecessary misunderstanding or complaints about a lack of transparency in our foreign exchange policy,” explained Kim Dong-yeon, the country’s finance minister and deputy prime minister for the economy, in an economy-related ministers’ meeting on Thursday in the Seoul government complex. “Given the maturity of our economy, it’s time for us to consider disclosing such records.”

Korea is the only OECD member country that does not disclose its foreign exchange interventions. Switzerland discloses such records annually, the United States quarterly, and most other countries do so on a monthly basis or an even shorter time frame.

The country’s foreign exchange authorities including the Bank of Korea will only disclose net amounts of buying and selling of foreign currency or net trading volume, the Finance Ministry explained in a report.

The records will be posted on the website of the Bank of Korea.

Seoul’s decision was the result of pressure by the United States and International Monetary Fund (IMF), which intensified in April when the U.S. Department of Treasury kept Korea on a monitoring list as a possible currency manipulator, saying, “Treasury…urges the [Korean] authorities to report its exchange rate intervention in a transparent and timely manner.”

In 2016, the IMF also recommended Korea disclose its market stabilization measures and again in January 2017 during its executive board meeting, saying, “A few directors encouraged publication of the intervention data.”

“The government used the declaration by the member countries of the Trans-Pacific Partnership [TPP] made in 2015 concerning exchange rate policies as a reference,” said the Finance Ministry in the report.

The TPP obliges member countries to reveal data on seven different items including monthly foreign exchange reserves and quarterly exports and imports, six of which Korea already discloses in line with the declaration, even though it is not a member of the TPP.

The government explained that regardless of its latest decision, the foreign exchange rate will be determined by the market and it will maintain a policy stance that it will use market stabilization measures if there is extreme one-sided volatility.

“The decision must be understood as the government’s attempt to provide information at a minimum scope and in the most stable manner for the market to adjust and react to the policy change,” said Kim after the meeting. “I believe we will be able to follow much more stable processes than other countries.”

CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]