Bloomberg: South Korean Government to Postpone $20 Billion U.S. Investment This Year Due to Weak Won

Yonhap News Agency

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 (local time), 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.

Additionally, the sources mentioned that the verbal intervention message delivered by U.S. Treasury Secretary Scott Bessent on January 14-who said that the current state of the Korean foreign exchange market does not align with Korea's strong fundamentals-helped support the value of the won. However, they added that it is still too early to assess the full impact of this intervention.

In November last year, South Korea and the United States reached an agreement in follow-up tariff negotiations that, out of South Korea’s 350 billion dollar investment in the United States, 150 billion dollars would be allocated to the shipbuilding sector, and 200 billion dollars would be invested as a long-term investment within an annual limit of 20 billion dollars.

The report aligns with the government's existing position that the scale and timing of investments in the United States can be adjusted flexibly in response to exchange rate pressures. The memorandum of understanding (MOU) signed between South Korea and the United States regarding investments in the United States includes provisions that allow for adjustments to the timing or scale of payments if concerns such as instability in the foreign exchange market arise.

Bloomberg News inquired with the Ministry of Economy and Finance about the possibility of delaying investments in the United States this year. The ministry reiterated Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol’s previous stance, emphasizing that it is unlikely the investment project will begin in the first half of this year.