IMF applauds Korea’s currency transparency

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IMF applauds Korea’s currency transparency

The International Monetary Fund on Thursday welcomed Korea’s decision to regularly reveal its currency market intervention records.

Korea’s Finance Ministry said it would disclose the records starting in March 2019 to help remove unnecessary misunderstandings about the country’s currency market operations.

“I welcome the Korean government’s decision to publish data on foreign exchange intervention,” Christine Lagarde, managing director of the IMF, said in a statement. “It delivers a strong message about commitment to a flexible exchange rate regime. This will enhance Korea’s inflation targeting regime by strengthening the credibility of the announced monetary policy objective and the anchoring of inflation expectations. A credible commitment to a flexible exchange rate also facilitates external and internal adjustment.”

The disclosures of the net amount of U.S. dollars used for selling and buying by Korea’s currency authorities will be made within three months after a reporting period. Quarterly releases will begin following the third quarter of 2019.

Seoul said earlier that the country is considering the detailed disclosure of its interventions in the foreign exchange market as part of a broader move to boost transparency and clear itself of suspicion of exercising undue influence on exchange rates.

Korea’s financial authorities have persistently claimed they do not interfere in the foreign exchange market but engage in “smoothing operations” against extreme one-sided movements.

In April, the United States kept Korea on its “monitoring list” but did not designate the country as a currency manipulator.

Washington has vowed to aggressively keep tabs on and combat unfair currency practices, saying it cannot and will not bear the burden of an international trading system that, it claims, unfairly disadvantages American exports and gives an edge to its trading partners.

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