The United States and South Korea have agreed to expand cooperation to stabilize the foreign exchange market and cap the price of Russian oil to mitigate rising global inflation.
US Treasury Secretary Janet Yellen met with South Korean Finance Minister Choo Kyung-ho in Seoul, South Korea, on July 19 to discuss economic security and measures to strengthen supply chains.
Yellen and Choo agreed that the two countries “have the capacity to implement various cooperative actions, such as liquidity facilities, if necessary,” South Korea’s finance ministry said in a statement. statement.
The ministry statement does not mention whether the United States and South Korea agree on a currency swap line, which ended in December 2021.
South Korea’s consumer price index climbed 6% in June, the highest since 1998, while its exchange rate has plunged more than 9% against the US dollar this year.
The Republic of Korea is the world’s 10th largest economy, a key producer of high-tech goods and a key partner for US investment. I met with Deputy Prime Minister Choo Kyung-ho to discuss economic security and reducing consumer costs by strengthening supply chains. pic.twitter.com/rpBcmxyqtB
— Secretary Janet Yellen (@SecYellen) July 19, 2022
Yellen met with South Korean President Yoon Suk-yeol ahead of his meeting with Choo, during which Yoon called for an in-depth discussion with Washington on cooperation to stabilize the foreign exchange market.
According his office, Yoon stressed that “global energy price stability and supply chain difficulties should be resolved through such international cooperation, and the two countries should actively cooperate under a common goal.”
Russian oil price peak
During their meeting, Choo said that South Korea would be willing to support Washington’s plan to impose a price cap on Russian oil, but that the price cap must be imposed in a way that stabilizes prices at the time. consumption.
The countries have not yet established a ceiling price for Russian oil. But Yellen said capping Russian oil prices would deprive Russia of oil revenue while lowering oil prices for consumers.
“Russia’s illegal war and subsequent global energy shock underscored the need to protect ourselves from the dependence on foreign oil that leaves us vulnerable to the whims of authoritarians like Vladimir Putin,” she said in Remarks prepared by the United States Department of the Treasury.
“At the same time, the United States and [the] The Republic of Korea continues to work closely to limit North Korea’s continued development and proliferation of its nuclear and missile programs. »
Yellen told reporters on July 16 that she held productive bilateral meetings on the proposed price cap with more than six counterparts on the sidelines of a meeting of Group of 20 finance officials on the Indonesian island of Bali.
Reuters contributed to this report.