Japanese and South Korean finance ministers met to discuss boosting economic and financial ties as the two nations work to repair relations marred by a territorial dispute.
“It was a very significant and meaningful financial discussion,” Koriki Jojima told reporters yesterday after talks with his South Korean counterpart Bahk Jae Wan in Gwacheon, south of Seoul. In a joint statement, the two reaffirmed the importance of resuming negotiations on a free trade agreement and resolved to work closely to strengthen collaboration on issues ranging from finance to the environment.
The meeting, which was postponed from August, suggests Asia’s second- and fourth-largest economies are trying to improve relations after a territorial dispute damaged ties and led to the cancellation of an extension of a currency swap agreement. Japan is also involved in a row with China over the ownership of islands in the East China Sea.
“There are difficult issues,” Jojima said. “But on the other hand, especially on the economic front, Japan and Korea have a large influence on the regional economy and they should link up in the areas where that is possible.”
Bahk said the talks were “aimed at deepening relations” and that “Jojima and I shared views on policy direction across tax, foreign exchange and fiscal soundness.” He declined to elaborate on the currency discussions.
The yen last week fell to the weakest level since April against the U.S. dollar while the won rose to a 14-month high. The South Korean currency has strengthened about 9 percent against the yen since the end of June.
The won has appreciated about 5.5 percent versus the dollar since the end of June, the best performer among Asia’s 11 most-traded currencies, according to data compiled by Bloomberg. The yen weakened about 3.2 percent against the greenback during the same period.
South Korea’s Deputy Finance Minister Choi Jong Ku said Nov. 22 the government will take action to curb excessive fluctuation in the won.
South Korea is Japan’s third-biggest trading partner, with merchandise trade between the two rising almost 4 percent to 8.4 trillion yen ($102 billion) in 2011, according to Japan’s Ministry of Finance. Sales of Japanese carmakers in South Korea in October dropped 13 percent from the previous month, according to data provided by the Korea Automobile Importers and Distributors Association.
Political tension between Japan and South Korea escalated after President Lee Myung Bak visited islands claimed by both nations in August. The islands, controlled by Korea, are called Dokdo in Korean and Takeshima in Japanese.
Japan in May unveiled a plan to buy South Korean government bonds as part of efforts to diversify its foreign-exchange reserves. It didn’t specify the amount it would buy or provide other details.