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Joint Korea-U.S. fact sheet outlines broad strokes, but lack of specifics may impact currency volatility

Published: 14 Nov. 2025, 20:23

The Korean and U.S. governments on Nov. 14 released a joint fact sheet outlining a deal under which Korea will make $350 billion in investments in the United States in exchange for a reduction in tariffs to 15 percent. [SCREEN CAPTURE]

The Korean and U.S. governments on Friday released a joint fact sheet outlining a deal under which Korea will make $350 billion in investments in the United States in exchange for a reduction in tariffs to 15 percent. While the agreement includes safeguards aimed at minimizing volatility in Korea’s foreign exchange market, the measure lacks specifics, leaving room for uncertainty.

The $350 billion investment will be divided into $150 billion for the U.S. shipbuilding industry and $200 billion in strategic investments. The latter — which can be made in cash or equity — had drawn particular attention.

“We’ve established a ceiling of $20 billion in annual funding and included a safeguard allowing Korea to request adjustments to the funding amount or schedule if concerns about market instability arise,” Kim Yong-beom, presidential director of national policy, said at a press briefing Friday.

Specifically, the agreement states that Korea will, as much as possible, avoid sourcing U.S. dollars through direct purchases on the foreign exchange market. It also allows Korea to request changes in the amount or timing of funding if there are signs of irregular fluctuations in the won. The United States, in turn, agreed to “give due consideration” to such requests.

The $350 billion investment pledge is a sizable commitment for Korea. It represents over 80 percent of the country’s $428.82 billion in foreign reserves as of last month. Even the $20 billion annual cap commitment is substantial.

Top financial officials pose for a photo before a market stability meeting at the government complex in central Seoul on Nov. 14. From left: Financial Supervisory Service Gov. Lee Chan-jin, Bank of Korea Gov. Rhee Chang-yong, Deputy Prime Minister and Finance Minister Koo Yun-cheol and Financial Services Commission Chairman Lee Eog-weon. [NEWS1]

According to data from the Ministry of Economy and Finance, Korea’s total overseas direct investment in 2024 was $63.95 billion, meaning the new strategic investment alone would account for nearly one-third of the previous total — all at the request of Washington.

These investments must be made in dollars, which could add stress to an already volatile foreign exchange market. That’s why the two countries included a separate clause on exchange rate stability in the fact sheet. But the document only outlines a broad principle — that annual investment should remain below $20 billion “to minimize any potential on the market” — without specifying timing, channels or methods.

Some language in the agreement has raised concerns of ambiguity, as the U.S. is only required to “give due consideration to” Korean requests for coordination, not necessarily act upon them.

Korea’s currency market is already on edge. The exchange rate rose to 1,470 won per dollar — nearing volatility levels last seen during the 1997 Asian financial crisis — prompting Deputy Prime Minister and Finance Minister Koo Yun-cheol to step in with verbal intervention.

In a market stability meeting with Bank of Korea Gov. Rhee Chang-yong, Financial Services Commission Chairman Lee Eog-weon and Financial Supervisory Service Gov. Lee Chan-jin, Koo pledged to “mobilize all available tools to respond actively.”

He also stressed plans to work closely with major market players like the National Pension Service and exporters to stabilize the won. That could include increasing domestic equity holdings by the pension fund or implementing large-scale strategic currency hedging to counter rising external pressure from outbound investments.

The won-dollar exchange rate is displayed on a digital board at a Hana Bank dealing room in Jung District, central Seoul, on Nov. 14. [NEWS1]

Following Koo’s remarks, the exchange rate briefly fell to the 1,450 won-per-dollar range — but analysts noted this is not a lasting solution.

“There is persistent pressure on the won due to continued outflows of dollars and selling of won-denominated bonds,” said Lee Joo-won, an analyst at Daishin Securities. Individual investors exchanging won for dollars to invest abroad and foreign investors off-loading won-based bonds are contributing to the won’s depreciation.

Meanwhile, the fact sheet has helped clarify some of the earlier uncertainty surrounding tariff changes. Director Kim said that tariffs on semiconductors were negotiated on “terms not disadvantageous compared to major competitors such as Taiwan.”

He added that sensitive agricultural sectors, including rice and beef, were excluded from further market opening measures in consideration of Korea’s domestic concerns.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM YEON-JOO [[email protected]]