South Korea–U.S. Trade Talks Stalled Over Currency Issues, Seoul Confirms
South Korea’s efforts to finalize a trade deal with the United States have hit a roadblock over foreign exchange concerns. Seoul has asked Washington to work together on measures to limit the market impact of a planned $350 billion investment package, a senior presidential official said on Tuesday.
The delay follows President Donald Trump’s signing of an executive order last week to implement Japan’s $550 billion trade agreement with the U.S. Unlike Japan, South Korea has yet to finalize a written deal, even though the $350 billion package was agreed in principle in July.
Currency Pressures Central to Dispute
Presidential Policy Secretary Kim Yong-beom emphasized that South Korea’s situation differs significantly from Japan’s. While both countries run trade surpluses, their foreign exchange market conditions diverge sharply.
Kim said the biggest challenge in moving forward was assessing how the investment package would affect the dollar-won exchange rate. He noted that Japan benefits from the yen’s global role as an international currency, a currency swap program, and foreign exchange reserves nearly three times the size of South Korea’s. These factors allow Japan to absorb the impact of its $550 billion U.S. investment more easily.
Risks for the Korean Won
Since the announcement in late July, investors have warned that South Korea’s $350 billion package could put additional downward pressure on the won. By comparison, state-run policy banks can only secure $20–30 billion annually, while the national pension fund invests about $2–3 billion overseas each month. Both factors are already seen as weighing on the won.
Despite these concerns, the won has strengthened about 6% this year, trading near 1,390 per dollar. This follows four straight years of weakness that pushed the currency below the symbolic 1,400 level in 2024, its lowest point in 15 years.
Trade Negotiations Still Ongoing
South Korea and the U.S. agreed in April to include currency policy on the trade agenda. Working-level consultations have been ongoing since then, with Finance Minister Koo Yun-cheol confirming the issue will be addressed in the final agreement.
For now, Seoul insists that exchange rate stability must be prioritized before signing off on the $350 billion package, leaving the trade talks at a standstill.
