U.S. presidential election and the implications for Korea
- 3 years ago
전화연결: 美 대선 결과가 한국에 미치는 영향
Our next story is on the diplomatic and economic implications of the results of the U.S. presidential election for Korea.
For more on this, we turn to Lee Kyung-min from the Korea Times who is on the line for us.
Good morning Kyung-min, first, tell us how will the results of the November third elections affect the Moon administration's diplomatic policies?
Local pundits are paying keen attention to how much of a change will be in store concerning Korea's "New Northern Policy," a key initiative of President Moon Jae-in.
The policy seeks to bolster diplomatic, economic relations with what his administration calls "New Northern Nations," including China, Russia, North Korea, and other countries, mostly in Eurasia.
The initiative seeks to identify new sources of economic growth overseas, diversify energy supply, and logistics bases.
The U.S.' China policy will not see any fundamental change regardless of who wins, whether it is democratic presidential nominee Joe Biden, or President Donald Trump, because the world's two largest economies will continue with their drawn-out struggle for hegemony.
But the U.S.' North Korea policy will undergo a major change because, unlike Trump, who sought a "top-down" approach of denuclearization of the Korean Peninsula, Biden will seek the opposite "bottom-up" approach backed by strengthening bilateral cooperation with allies, meaning South Korea.
Biden winning will highlight the importance of the New Northern Policy because of increased sanctions against both Russia and North Korea, meaning the only way to seek resolution of a slew of political issues will be building trust by strengthening economic ties.
Now moving on to the economic front, what are some of the implications for the local financial market?
As we have seen over the past month, the local currency won has strengthened rapidly against the dollar, a cause for major concern to many growth driver firms in export-reliant Korea.
Continued and sustained appreciation of the won against the dollar will sap the competitive edge of Korean export firms, ending up tightening domestic consumption, which economists say is a dreadful combination that will frustrate the prospect of the much-awaited economic recovery amid the COVID-19 pandemic.
Also fanned by the currency losing value is the fear of deflation ― an overall decline in the general prices of goods and services.
The country's finance minister Hong nam-ki has repeatedly hinted at intervening in the local foreign currency market as a pre-emptive measure to limit swings in the value of the won hit by supply and demand mismatch amid continued market volatility.
The local currency is hovering at around 1,130 won-level, hitting an 18-month high. But market watchers say it could gain to as much as 1,100 won against the dollar if Biden wins and injects a massive stimulus package of 2 trillion dollars during his term.
The appreciation of the Korean won is attributable to a significant rise
Our next story is on the diplomatic and economic implications of the results of the U.S. presidential election for Korea.
For more on this, we turn to Lee Kyung-min from the Korea Times who is on the line for us.
Good morning Kyung-min, first, tell us how will the results of the November third elections affect the Moon administration's diplomatic policies?
Local pundits are paying keen attention to how much of a change will be in store concerning Korea's "New Northern Policy," a key initiative of President Moon Jae-in.
The policy seeks to bolster diplomatic, economic relations with what his administration calls "New Northern Nations," including China, Russia, North Korea, and other countries, mostly in Eurasia.
The initiative seeks to identify new sources of economic growth overseas, diversify energy supply, and logistics bases.
The U.S.' China policy will not see any fundamental change regardless of who wins, whether it is democratic presidential nominee Joe Biden, or President Donald Trump, because the world's two largest economies will continue with their drawn-out struggle for hegemony.
But the U.S.' North Korea policy will undergo a major change because, unlike Trump, who sought a "top-down" approach of denuclearization of the Korean Peninsula, Biden will seek the opposite "bottom-up" approach backed by strengthening bilateral cooperation with allies, meaning South Korea.
Biden winning will highlight the importance of the New Northern Policy because of increased sanctions against both Russia and North Korea, meaning the only way to seek resolution of a slew of political issues will be building trust by strengthening economic ties.
Now moving on to the economic front, what are some of the implications for the local financial market?
As we have seen over the past month, the local currency won has strengthened rapidly against the dollar, a cause for major concern to many growth driver firms in export-reliant Korea.
Continued and sustained appreciation of the won against the dollar will sap the competitive edge of Korean export firms, ending up tightening domestic consumption, which economists say is a dreadful combination that will frustrate the prospect of the much-awaited economic recovery amid the COVID-19 pandemic.
Also fanned by the currency losing value is the fear of deflation ― an overall decline in the general prices of goods and services.
The country's finance minister Hong nam-ki has repeatedly hinted at intervening in the local foreign currency market as a pre-emptive measure to limit swings in the value of the won hit by supply and demand mismatch amid continued market volatility.
The local currency is hovering at around 1,130 won-level, hitting an 18-month high. But market watchers say it could gain to as much as 1,100 won against the dollar if Biden wins and injects a massive stimulus package of 2 trillion dollars during his term.
The appreciation of the Korean won is attributable to a significant rise