NEW YORK – South Korea’s finance minister will hold talks with his US counterpart in New York on Wednesday, in a meeting expected to focus on a potential dollar liquidity backstop and Seoul’s $350 billion investment fund, which Washington has requested.
Koo Yoon-cheol, deputy prime minister and finance minister, will meet with US Treasury Secretary Scott Bessent on Sept. 24 in New York, according to Seoul’s government sources.
Koo advanced his travel plans by a day to accommodate the talks, they said.
The discussions are expected to center on whether Washington will extend an unlimited bilateral currency swap facility to Korea, in return for Seoul’s commitment to the $350 billion fund.
The fund has been at the heart of fraught negotiations between the two allies since a deal on reciprocal tariffs was reached in late July.
Seoul said that while it is committed to the fund in the form of guarantees or loans, a US request for cash commitments on this scale could destabilize the Korean won currency and drain the country’s foreign exchange reserves.
WITHOUT CURRENCY SWAP BACKSTOP, KOREA RISKS FOREX CRISIS
Korea’s reserves stood at $416.3 billion at the end of August, meaning the US request amounts to about 84% of the total.
President Lee Jae Myung, currently in New York to attend the UN General Assembly meeting, warned in a recent interview with Reuters that accepting US demands without a swap line could trigger a repeat of the 1997 Asian financial crisis.
“If we provide the full $350 billion in cash investment without a currency swap line, Korea will face a financial crisis similar to that of 1997,” he said.
Currency swaps are usually concluded between central banks – in this case, the Bank of Korea and the Federal Reserve – but the treasury secretary can influence policy through the White House and Congress.
Likewise, Seoul’s finance ministry oversees foreign-exchange policy, making the Koo-Bessent talks an important prelude to any central bank negotiations, sources said.
Koo is also scheduled to join President Lee at the Korea Investment Summit in New York on Thursday, where Wall Street investors will be briefed on Seoul’s economic strategy.
KOO’S MEETING WITH IMF MISSION
Koo’s planned meeting with Bessent comes a day after he held talks in Seoul with an International Monetary Fund (IMF) mission.
At the meeting, IMF mission chief Rahul Anand acknowledged the case for Korea’s expansionary fiscal policy in the short term but warned of mounting long-term fiscal risks from aging-related spending.
The Korean finance minister told the IMF team that Korea aims to use fiscal policy as a “turning point” to revive growth, pledging performance-based spending that could both stimulate demand and maintain sustainability.
Anand said Korea’s economy is showing signs of recovery and praised structural reforms focused on innovation and artificial intelligence.
The IMF will present the results of its annual consultation in Seoul on Wednesday.
By Shin-Young Park
nyusos@hankyung.com
In-Soo Nam edited this article.
