Top office mulls adjustment to U.S. investments with won in free fall

As the won-dollar exchange rate has shown little sign of easing, the presidential office is reviewing options to adjust the pace of Korea’s investment in the United States under the tariff-related trade agreement — capped at $20 billion annually — in an effort to stabilize the currency. On Monday, the won closed at 1,480.1 per dollar in the Seoul foreign exchange market, increasing 0.26 percent from the previous session of 1,476.3 won.

The presidential office is considering adjusting U.S.-bound investment should the current high exchange rate environment persist, according to an official on Monday.

The Korean and U.S. governments concluded trade negotiations on Nov. 14, with Seoul agreeing to invest a total of $350 billion in the United States — including $150 billion in the shipbuilding sector — with the aforementioned annual cap. From the outset, concerns were raised that such large-scale outbound investment could worsen the won-dollar exchange rate.

Any adjustment to the investment amount would require a request to Washington.

A joint fact sheet from the Korea-U.S. trade talks released Nov. 13 states under the section “foreign exchange market stability” that if the implementation of commitments under the memorandum of understanding on U.S. investments is deemed likely to cause market instability, Korea may request adjustments to the amount and timing of the funds. The document also notes that the United States will review such requests “in good faith.” A senior official at Seoul's presidential office described the wording as “sufficiently strong.”

Within the Korean government, there is also talk that passing a special bill on U.S. investment, currently under discussion at the National Assembly, could be delayed due to the exchange rate woes. The Democratic Party introduced the bill on Nov. 26. A senior government official said that without the legislation, U.S.-bound investment cannot proceed, adding that any delay in the bill’s approval would also push back the timing of the investment.

While an adjustment to the investments is on the table, officials said the government and the ruling party are not yet at the stage of concrete discussions about intentionally delaying the bill due to exchange-rate concerns.

The presidential office and the government have said they will mobilize all available measures to bring the won-dollar exchange rate down to the low-1,400 won range by early next year. Moon Shin-hak, first vice minister of trade, industry and resources, is reportedly planning to meet with the chief financial officers of major exporting companies early this week to ask for cooperation in the government’s exchange-rate response.

Behind the Lee Jae Myung administration’s all-out push on exchange-rate stabilization lies concern that the high exchange rate could erode the president's approval ratings. The current exchange-rate level mirrors the sharp spike seen after former President Yoon Suk Yeol declared martial law on Dec. 3, 2024, and the impeachment proceedings that followed.

The won-dollar exchange rate, which stood at around 1,410 won immediately after the declaration of martial law last year, continued to climb and reached 1,487.07 won on April 8, shortly after Yoon was removed from office.

After the presidential election on June 3, the exchange rate fell to 1,350.18 won on June 30, but has since risen steadily, returning to a level comparable to that seen immediately after the impeachment.

In a Realmeter poll conducted between Dec. 15 and Friday, Lee’s approval rating fell 0.9 percentage points from the previous week to 53.4 percent. Realmeter said “economic uncertainty, including the won-dollar exchange rate breaching the 1,480 won level, weighed on approval ratings.”

Still, the presidential office maintains that the most severe period for the exchange rate has passed. A senior official said that “the tone of exchange-rate responses from economic ministries has become more measured this week.”

The office forecasts that the exchange rate will fall to the low-1,400 won range by early next year.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY YOON SUNG-MIN [shin.minhee@joongang.co.kr]