The success of Japan and South Korea in inserting language expressing concerns about their currencies in a joint statement with the US this week underlines the political heat they face from stiff inflation exacerbated by weak exchange rates.
The matter is all the more urgent as tensions in the Middle East threaten to drive up oil prices and accelerate cost pressures that have already taken a domestic political toll on both governments. For the US, the statement was a small price to pay to appease a few allies they need to stay on board with a more strategic goal: containing China.
In the first trilateral financial dialogue since the historic three-way leaders’ summit at Camp David last year, the US, Japan and South Korea agreed on Wednesday to “engage in close consultations” on currency markets, addressing “serious concerns” from Tokyo and Seoul over the recognized a collapsing economy. Japanese yen and South Korean won.
