US, South Korea to Expand Cooperation in Foreign Exchange, Price Cap on Russian Oil

South Korean President Yoon Suk-yeol (R) shakes hands with U.S. Treasury Secretary Janet Yellen (L) during a meeting at the presidential office in Seoul, South Korea on July 19, 2022. (South Korean Presidential Office via Getty Images)

The United States and South Korea have agreed to expand cooperation in stabilizing the foreign exchange market and capping the price of Russian oil to alleviate rising global inflation.

U.S. Treasury Secretary Janet Yellen met with South Korean Finance Minister Choo Kyung-ho in Seoul, South Korea, on July 19 to discuss economic security and measures for strengthening supply chains.

Yellen and Choo agreed that the two countries “have the ability to implement various cooperative actions, such as liquidity facilities, if necessary,” South Korea’s Finance Ministry said in a statement.

The ministry’s statement made no mention of whether the United States and South Korea are in agreement about a currency swap line, which ended in December 2021.

South Korea’s consumer price index climbed by 6 percent in June, the highest since 1998, while its currency rate plunged by more than 9 percent against the U.S. dollar this year.

https://twitter.com/SecYellen/status/1549455230852530176

Yellen met with South Korean President Yoon Suk-yeol ahead of her meeting with Choo, in which Yoon called for an in-depth discussion with Washington on cooperation to stabilize the foreign exchange market.

According to his office, Yoon emphasized that “global energy price stability and supply chain difficulties should be resolved through such international cooperation and that the two countries should actively cooperate under a common goal.”

Price Cap on Russian Oil

During their meeting, Choo expressed that South Korea would be willing to support Washington’s plan to impose a price cap on Russian oil, but that the price cap must be imposed in such a way that it stabilizes consumer prices.

The countries haven’t yet established a price ceiling for Russian oil. But Yellen said the price cap on Russian oil would deprive Russia of oil revenues while also lowering oil prices for consumers.

“Russia’s illegal war and the global energy shock that has followed has underscored the need to protect ourselves from dependence on foreign oil that makes us vulnerable to the whims of authoritarians like Vladimir Putin,” she said in remarks prepared by the U.S. Treasury Department.

“At the same time, the United States and [the] Republic of Korea continue to work in lockstep to limit North Korea’s continued development and proliferation of its nuclear and missile programs.”

Yellen told reporters on July 16 that she had held productive bilateral meetings about the proposed price cap with more than six counterparts on the sidelines of a meeting of Group of 20 finance officials on the Indonesian island of Bali.

Reuters contributed to this report.