S. Korea presses China over currency peg: Financial Times

Asian Economic News, July 28, 2003

TOKYO, July 23 Kyodo

South Korea has urged China and other Asian countries to allow their currencies to appreciate against the dollar, arguing that government intervention is distorting the region's foreign exchange market, the Financial Times reported in its Wednesday edition.

South Korean Deputy Finance Minister Kwon Tae Shin made the call in an interview with the British business daily, adding to pressure from the United States, Japan and Europe for Beijing to loosen the peg of the yuan to the dollar.

Critics say China's currency peg system is undermining other countries' competitiveness.

The British economic daily quoted Kwon as saying that South Korean exports are being priced out of the market by those from countries that were keeping their currencies artificially cheap.

''(South) Korea is always arguing, whenever we talk to other Asian countries, that the market should set the value of currencies,'' Kwon said.

''If every country intervenes to depreciate their currency against the dollar, it creates a beggar-my-neighbor situation. (South) Korea is keeping up with the market more than other currencies in Asia,'' Kwon added.

Japanese Finance Minister Masajuro Shiokawa and U.S. Treasury Secretary John Snow have urged China to widen the trading band of the Chinese currency to the dollar to let the yuan go up against the dollar.