Koo Yooncheol: "Difficult to Execute $20 Billion US Investment in the First Half of This Year"

"Will Not Tolerate Market Concentration
That Leads to Won Depreciation"

Yonhap News Agency

On January 16, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol stated that it would be difficult to execute the annual US investment quota of 20 billion dollars in the first half of this year. He emphasized that he would not tolerate excessive concentration that could lead to an undue depreciation of the Korean won.

In an interview with a foreign news outlet on the same day, Deputy Prime Minister Koo responded to the question of whether US-bound investments could begin in the first half of the year by saying, "I don't think so." He added, "For example, even if a nuclear power plant project is selected, it will take time to determine the location, design, and begin construction, so the initial investment will be much smaller than the expected 20 billion dollars per year."

Deputy Prime Minister Koo further explained, "Given the current foreign exchange situation, it will be difficult to make significant investments at least this year." The special law for establishing a US investment fund has also yet to pass the National Assembly. Deputy Prime Minister Koo plans to ask the National Assembly to begin discussions on the special law for US investment, which includes provisions for establishing the Korea-US Strategic Investment Fund, starting next month.

Regarding additional macroprudential measures to defend the exchange rate, he said, "We are not considering them," and added, "Since excessive market concentration could drive down the won, we will swiftly implement the market stabilization measures recently announced."

The previous day, Choi Ji-young, Director-General for International Economic Affairs at the Ministry of Economy and Finance, mentioned that if the high exchange rate situation persists, macroprudential measures could be considered. However, since the government is currently working to have Korea included in the Morgan Stanley Capital International (MSCI) Developed Markets Index, the intention is not to introduce additional regulations that could impede capital flows.

Deputy Prime Minister Koo remarked, "It is true that the downward pressure on the won in the foreign exchange market is somewhat greater than we expected," and warned market participants not to test the authorities' resolve.