Korea, Japan to discuss currency swap line during ministerial talks

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Korea, Japan to discuss currency swap line during ministerial talks

Published: 08 Jun. 2023, 17:45

Finance Minister Choo Kyung-ho, center, speaks at a discussion forum held in central Seoul on Thursday. [MINISTRY OF ECONOMY AND FINANCE]

Korea will discuss re-establishing a currency exchange swap line with Japan that expired in 2015 during a ministerial meeting in late June.

“Pending economic issues between the two countries, including bilateral and regional financial cooperation, will be discussed at the bilateral finance minister meeting on June 29,” said Finance Minister Choo Kyung-ho at a forum held in central Seoul on Thursday.

The meeting will be the first bilateral dialogue between the finance ministers of the two countries since August 2016. The two parties agreed to resume the long-stalled meeting in May.

Choo and his Japanese counterpart Shunichi Suzuki reached the agreement on the sidelines of the 56th Annual Meeting of the Board of Governors of the Asian Development Bank in Incheon.

Japan is “a very important economic cooperation partner,” Choo said.

Noting Japan's strengths in materials, devices and equipment, he added that strengthening partnership with Japan will “bolster the competitiveness of our industry.”

Choo pointed to the growing number of travelers between the two neighbors, adding that Korea is pushing to raise the weekly number of flights connecting the countries to 1,000 in the second half of the year. There were 590 flights connecting the two countries a week as of May.

“There are concerns the revival of Japan’s economy would reverse our growth, but recovery of Japan’s economy is very helpful to us” in creating a virtuous cycle for the two countries to jointly grow, said Choo.

Korea and Japan have recently been striving to mend ties after the two countries agreed to reinstate each other to their respective list of trusted trading partners.

Relations between the two countries had soured over recent years over a number of largely history-related issues, including Korean court rulings that ordered Japanese firms to compensate Korean forced labor victims during Japan’s colonial rule of Korea between 1910 and 1945.

In 2019, Japan slapped unilateral export restrictions on three key materials in the production of semiconductors, a move widely seen as retaliation for Korean court rulings. Relations spiraled downward from there, but have largely recovered this year on the back of a series of bilateral summits between Korean President Yoon Suk Yeol and Japanese Prime Minister Fumio Kishida.

Choo added Korea’s growth is projected to fall slightly short of the government’s 1.6 percent projection announced in December.

Details of the figure will be contained in the government’s economic forecast in around early July when it releases its biannual policy plans.

The Organisation for Economic Co-operation and Development on Wednesday revised down Korea’s growth forecast to 1.5 percent for this year, slashing the outlook from 1.6 percent from the March projection. The Bank of Korea in May projected Korea to grow by 1.4 percent.

Choo said inflation is expected to fall to a high 2 percent range in June.

Consumer prices reached a 19-month low in May at 3.3 percent.

Choo said the government is not considering a supplementary budget for this year, despite growing concerns regarding tax revenue shortage.

BY JIN MIN-JI [jin.minji@joongang.co.kr]