South Korea, Japan vow deeper FX cooperation after rare joint intervention

Senior finance officials from South Korea and Japan met in Tokyo on Friday, vowing to maintain close coordination just three weeks after a rare coordinated currency intervention jolted regional markets and helped bolster both the won and the yen.

The Meeting

South Korea's deputy finance minister for international affairs, Moon Ji-sung, held talks with Japan's vice finance minister and top currency diplomat, Atsushi Mimura, at the Japanese Ministry of Finance, according to a statement from Seoul's finance ministry. The two officials exchanged views on recent developments in the global economy and financial markets, shared their governments' respective policy responses, and discussed ways to promote bilateral exchanges.reuters+1

They also addressed pending issues on multilateral platforms, including ASEAN+3 and the G20, and pledged to continue close coordination at both the senior and working levels.koreatimes

The July 31 Intervention

The meeting came against the backdrop of aggressive, coordinated moves in foreign exchange markets. On July 31, authorities in Tokyo and Seoul both stepped in to buy their currencies in what analysts described as a rare coordinated intervention — possibly with U.S. involvement — marking an escalation in efforts to stem currency weakness, according to Reuters. The intervention helped strengthen both the Korean won and the Japanese yen, according to Bloomberg.bloomberg+1

Moon had previously noted that South Korea was maintaining close coordination with Japan amid market speculation about the joint intervention.koreatimes

Broader Context

The USD/JPY and USD/KRW currency pairs had come under pressure earlier this year as a strong dollar weighed on Asian currencies. The coordinated response in late July represented a departure from the more typical pattern of unilateral action, with the possible involvement of the United States adding a further layer to the intervention.

Friday's meeting signals that Seoul and Tokyo intend to institutionalize closer foreign exchange cooperation, with both sides committing to ongoing dialogue at multiple levels of government.reuters+1