Seoul Says Trade Deal with US is Stalled Due to Won's Vulnerability

Trade negotiations between South Korea and the United States have reached a significant deadlock, with the primary sticking point revolving around foreign exchange issues. According to a senior South Korean presidential official, the talks are stalled because Seoul is deeply concerned about the potential impact of a massive planned $350 billion investment package in the US on its domestic currency, the won. To mitigate any market volatility that could result from converting the necessary funds, South Korea has asked Washington to help find a viable solution.

The situation is reportedly different from a similar trade deal the US recently signed with Japan, which included a $550 billion investment package. South Korean officials argue that unlike the Japanese yen, the South Korean won is not an international currency and is thus far more vulnerable to external shocks.

Furthermore, Seoul has far smaller foreign exchange reserves and no currency swap program with the US, making its currency particularly susceptible to the massive outflow of funds required for such a large investment.

Seoul has made it clear that it will not rush into a final agreement on the fund's details simply to secure lower tariffs on its automobile exports to the US. The government is prioritizing the stability of its broader economy over a quick trade concession. The South Korean official emphasized that the potential for significant economic disruption from the currency issue must be addressed first.

 South Korean officials are urging Washington to consider the unique conditions of their foreign exchange market as a priority before a final deal can be signed, as their position is distinctly different from Japan's.