Won Going Up
Korea is regarded as one of the countries that have been affected the most by the currency war continuing for years, as quantitative easing by major economies has resulted in the rapid appreciation of the Korean currency.
Still, the United States and some other countries are demanding the Korean government stop its intervention in the forex market. Under the circumstances, an increasing number of experts are saying this is unfair.
The value of the Korean won has skyrocketed 36 percent against the Japanese yen since 2013, and the percentage has amounted to 14.71 against the euro since the second half of last year.
Nevertheless, the U.S. Treasury Department called for the Korean government to stop its intervention last month. It claimed that the Korean financial authorities intervened in the foreign exchange market in summer and December last year and in January this year. The Korean government denied the claim, and some criticized the U.S. as being discriminatory.
The others, however, said that the criticism was based on a misleading and narrow perspective in which monetary easing is regarded merely as a weapon for the currency war. According to them, many countries such as the United States see monetary easing as common policy for economic stimulus. PIMCO CIO Andrew Balls recently mentioned in his contribution to the Financial Times that the ECB’s quantitative easing was not an act of trade war but a response to the severe deflation risk in the eurozone, and the subsequent depreciation of the currency was a kind of byproduct having nothing to do with forex market intervention.