October 14, 2010 13:31
The Japanese government has questioned Korea's role as the host country of the G20 Summit because Seoul's authorities regularly intervene in the country's foreign exchange, according to media reports Wednesday. Japan essentially accused Korea of currency manipulation.
Japanese Prime Minister Naoto Kan, in a parliamentary budget committee meeting on Wednesday, was asked by a lawmaker about the Korean government's regular intervention to stem the won's rise. Kan said, "It is against the mutual cooperation of the G20 for particular countries to artificially keep the value of their currencies from rising." He urged Korea and China to play by the rules.
Japanese Finance Minister Yoshihiko Noda also told a parliamentary panel, "In Korea, intervention happens regularly. As chair of the G20, Korea's role will be seriously questioned." Reuters said Japanese authorities intervened in the currency market last month for the first time in more than six years to try to stem a rise in the yen that is threatening its fragile economic recovery. Noda drew a distinction between that action and more frequent intervention by Seoul and Beijing.
Noda's comments could hurt Korea's hopes to act as a mediator in the currency war between the world's major economies ahead of the G20 Summit that begins in Seoul on Nov. 11. Seoul did not officially respond to Kan and Noda's comments, but a high-ranking Korean government official said, "It was inappropriate to comment on the foreign exchange policies of another country, and such groundless comments are ludicrous."
Korean forex authorities claimed Seoul, like any other country, does not stand idly by when its currency is threatened by speculative forces but it does not intervene in the market to defend the currency.
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