Finance Minister Warns Against FX Speculation: Korea Seeks to Resume FTA Talks With Japan
Korea Times
Finance Minister Warns Against FX Speculation: Korea Seeks to Resume FTA Talks With Japan
By Kim Sung-jin, Staff Reporter
8 February 2006
Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo Wednesday said that the Korean won’s current strength against the dollar will not last long.
At the International Symposium on World and Korean Economy Outlook 2006, co-hosted by The Korea Times and Asia Economy Daily, Han said that the won-dollar exchange rate would not stay at the current level this year, hinting that the won would lose strength.
I can't guarantee the direction the won-dollar exchange rate will move throughout the year, but on an annual basis, the won-dollar rate would not stay at the current level,'' Han said.
Han's remarks mean that the government would take the necessary steps to put the brakes on the rapid appreciation trend of the Korean won against foreign currencies.
At the symposium, Han also signaled that Korea would soon recommence its efforts to form an FTA with Japan, saying that the beginning of Korea-U.S. FTA negotiations would leverage Korea's free trade negotiation with the world's second-biggest economy.The government already announced its plans to begin the formal FTA talks with the U.S. with the aim of completing the negotiation by March next year,’’ Han said.
We expect the latest development to have a positive influence on Korea's pursuit of an FTA with Japan,'' Han said.
Rep. Kang Bong-kyun, chairman of the ruling Uri Party's policy committee and former deputy prime minister for the economy, lent credence to the speculation that Korea would soon resume its efforts to recommence the FTA talks with Japan.I believe that Korea should quicken its steps to resume FTA talks with Japan,’’ Kang said.
Only by doing so will Korea be able to make the dynamic Northeast Asian market and China into stepping stones and opportunities for Korea's rapid economic growth for at least the next 20 years,'' Kang said.
Meanwhile, American Chamber of Commerce in Korea (AmCham) President Tami Overby said the Korea-U.S. FTA would without doubt give a boost to Korea's economic growth.This is a very historic time for the Korean economy as we all know that the U.S. and Korea announced last week the launch of FTA negotiation,’’ Overby said.
If this negotiation is successful, it will dramatically change the future of this economy and give a new impetus for growth,'' she added.
The first session of the symposium began with David T. Coe, senior advisor for the Asia and Pacific Department of IMF, who helped restructure the Korean economy during Asia's financial crisis in late 1990s. Coe presented positive perspective on the world and Asian economies for the year 2006.Global expansion will remain on track despite the effects of oil price and natural disasters such as Katrina,’’ Coe said.
Oh Jong-nam, executive director of IMF, warned again global imbalances. Oh said that while Asian countries are accumulating foreign reserves after financial crises, consumption has exploded in the U.S., leading to a huge deficit. Such global imbalance could lead to chaos of financial markets and global depression, Oh warned. Now Korea's foreign reserve holding is more than 10 times what we had to borrow from IMF. Korea is enjoying trade surplus, but is not investing for the future,'' he said.
Hyun Jung-taik, President of Korea Development Institute (KDI), predicted that Korea's economic growth this year will be around 5 percent. Rising oil price and strengthening of the Korean currency may have negative effects on the export and domestic economy, but market conditions of other countries is a more important factor in export, he said, remaining positive on Korea's exports this year.
Presiding over the luncheon, Vice Chairman of the Financial Supervisory Commission Yang Cheon-sik said Korea is to provide a level playing field, give equal treatment to domestic and foreign investors and strictly regulate unfair transactions. He also expected the convergence and scaling up of local financial institutions to raise competitiveness against international players.
The symposium continued with a presentation by Robert E. Fallon, chairman of Korea Exchange Bank. Fallon was optimistic about the Asian financial market this year, citing growing market capitalization and solid macroeconomic fundamentals as contributors. He also supported Asia's discussion about creating a common currency under a single economic zone like the EU.
Dominique Dwor-Frecaut, managing director of Barclays Capital, was positive about this year's Asian capital market.Pan-Asian GDP is forecast to rise 6.1 percent this year,’’ Dwor-Frecaut said. She selected Indonesia, Korea and Malaysia as top performers of the bond market.
Johan Leven, managing director of Goldman Sachs Asia M&A, predicted that global mergers and acquisitions (M&A) will be active this year thanks to the high-return equity markets and low interest rates. Lee Jae-hong, CEO of UBS Korea, expected strong M&A activities in Korea as market environment improved and investment funds increased.
