[Exclusive] Chinese People's Bank Officials Spotted in Washington... Forex Market on Alert [Kim Ik-hwan's Ministry Hands Up]

Late Last Month at the US Treasury Headquarters

Chinese People's Bank Officials Enter

"Are They Negotiating Yuan Exchange Rates?" On Alert

"Why are those people here?"

Late last month. Washington DC, USA. Our foreign exchange authorities spotted Chinese individuals. Their faces were familiar. They were from the People's Bank of China, the central bank of China, whom they had met often. These Chinese individuals entered the Treasury next to the White House. Various interpretations emerged as the People's Bank of China, which oversees China's exchange rate policy, moved to the Treasury. As there is speculation that the US will demand a yuan appreciation from China, various interpretations follow. There is speculation that the US and China might be conducting exchange rate negotiations behind the scenes.

According to the Ministry of Strategy and Finance and the Bank of Korea on the 19th, officials from the People's Bank of China responsible for exchange rates and international affairs were spotted entering the US Treasury headquarters late last month by foreign exchange authorities. A government official said, "I saw officials from the People's Bank of China, whom I knew from before, entering the Treasury."

Previously, a domestic media outlet also reported that a senior Chinese official entered the Washington Treasury headquarters with about ten attendants around 7 am on the 24th of last month. The US and China are continuing negotiations, holding high-level trade talks in Geneva, Switzerland, on the 12th of this month. It has not been confirmed whether they are conducting exchange rate negotiations in addition to trade negotiations. However, there is much speculation that the US demanded a yuan appreciation from China. The sight of People's Bank of China officials heading to the US Treasury is seen as supporting this speculation.

There are voices cautioning against overinterpretation. Another government official explained, "Since the exchange rate report is due next month, they might have had routine consultations," adding, "Korean and Japanese foreign exchange authorities frequently visit the US Treasury."

If US-China yuan negotiations materialize, the pressure to lower the won-dollar exchange rate is expected to increase significantly. Bloomberg reported that Choi Ji-young, Assistant Deputy Minister of the Ministry of Strategy and Finance, and Robert Kapros, Assistant Deputy Secretary of the US Treasury, met in Milan, Italy, on the 5th to discuss foreign exchange market operating principles.

Following the news of Korea-US exchange rate negotiations, the won-dollar exchange rate closed at 1,394.50 won, down 25.70 won, on the 15th. After fluctuating, it closed at 1,400 won in night trading on the 16th. If US-China yuan negotiations are also intertwined, the expectation of a strong won against the dollar may gain momentum.

Kim Ik-hwan/Nam Jeong-min Reporter lovepen@hankyung.com