Bloomberg News has reported that the South Korean government is expected to postpone its plan to invest up to 20 billion dollars in the United States due to the weakness of the Korean won.
According to Bloomberg News on January 20, sources familiar with the matter stated, “The investment should be delayed until the foreign exchange market stabilizes.”
The sources also noted, “Capital outflows by companies and individual investors are putting pressure on the exchange rate, but the situation is expected to stabilize soon.” However, they did not specify whether the South Korean government has a particular exchange rate level in mind, leading to moratorium on the US investment until market stabilizes.
2. What is this related to sub
(1) Failure of Tariff-based coercion: Trump claimed he secured tens of billions of dollar investment to the US by threatening trade partner with tariffs. But, other nations like Korea made an exception clause in the agreement with Trump which can be used to delay or not make any investment. In the case of Korea, it was “currency exchange” clause, which allows Korea to suspend or delay all investment to the US if KRW value falls.
3. My opinion
Recent drops in KRW value is greatly helping export-focused Chaebols such as SK and Samsung, leading to record profit. KRW devaluation also provided a good excuse for Korean government to delay US investment they promised to Trump. The possible side effect is increased price in imported good leading to inflation…but recent data shows inflation has yet to materialized.
PaladinOfPragmatism on
Honestly, I’d be surprised if they ever actually invested thay money after what we did to the employees they sent over.
2 Comments
[Submission text]
1. Summary
Bloomberg News has reported that the South Korean government is expected to postpone its plan to invest up to 20 billion dollars in the United States due to the weakness of the Korean won.
According to Bloomberg News on January 20, sources familiar with the matter stated, “The investment should be delayed until the foreign exchange market stabilizes.”
The sources also noted, “Capital outflows by companies and individual investors are putting pressure on the exchange rate, but the situation is expected to stabilize soon.” However, they did not specify whether the South Korean government has a particular exchange rate level in mind, leading to moratorium on the US investment until market stabilizes.
2. What is this related to sub
(1) Failure of Tariff-based coercion: Trump claimed he secured tens of billions of dollar investment to the US by threatening trade partner with tariffs. But, other nations like Korea made an exception clause in the agreement with Trump which can be used to delay or not make any investment. In the case of Korea, it was “currency exchange” clause, which allows Korea to suspend or delay all investment to the US if KRW value falls.
3. My opinion
Recent drops in KRW value is greatly helping export-focused Chaebols such as SK and Samsung, leading to record profit. KRW devaluation also provided a good excuse for Korean government to delay US investment they promised to Trump. The possible side effect is increased price in imported good leading to inflation…but recent data shows inflation has yet to materialized.
Honestly, I’d be surprised if they ever actually invested thay money after what we did to the employees they sent over.