Japan considering ending currency swap pact with South Korea

Gee what a surprise. You devalue the crap out of your currency, and suddenly nobody wants it.

who'da thunk?

Abe and his cronies likes to poke, poke, poke their adversaries from afar, but when he comes face-to-face with them, he's all phony smiles and handshakes, claiming he's "doing everything we can to make our region peaceful." Then he runs home to safety...and does things like this.

Well, who do you think that comment about "segregating foreigners like South Africa's apartheid" comment by one of Abe's closest advisers was directed at? I think the Koreans and other Asian nations know full well the answer to that.

This Abe administration is as slippery as an eel. It constantly talks out of both sides of its mouth. If I can't trust him, and I most certainly do not, why should I be surprised that not a lot of others do, either? In fact, I'd be far more suspicious if they were showing signs of confidence in this revisionist charlatan.

Little children... all of them.

A non-story. If there is once again a big financial crisis, the big sinking ship sentiment will throw folks in the region back into the fleet of life rafts. By that time the fleet might fly the RMB pennant.

So on Friday govt. sends a letter seeking better ties with SK

My understanding was that South Korea invited the pro-SK Japanese lawmaker Nikai, while intensifying Japan bashing. In the meeting with Nikai, President Park refused all Japan's requests.

My understanding was that... President Park refused all Japan's requests.

Thanks, Tina. We're earachingly familiar with the black van perspective.

Nikai and Park further consented the two countries should collaborate to promote exchanges and cooperation in the fields of tourism, sports and youth, and to make a success of both the 2018 Pyeongchang Winter Olympics in South Korea and the 2020 Summer Games in Tokyo.

http://www.japantimes.co.jp/news/2015/02/14/national/politics-diplomacy/ldp-executive-south-koreas-park-agree-on-need-to-resolve-issue-of-wartime-forced-prostitution/#.VOAyhsZU_Io

japan needs to find communication with these partners bc its waisting opportunity on economical growth or partnerships and peace in the region and japan itself. in my opinion abe wants to expand japanese land

I understand from people I know in finance that the agreement has just outlived its usefulness. SK is strong again and does not need the help. It is the press that is linking this with the political friction between countries. Business goes on as normal. Ordinary people don't care about this.

Currency swaps cut out the middle men.

tinawatanabe: "My understanding..."

I think that's about where the ultra-right wing hate kicks in. Sensenotsocommon points that out pretty well.

It seems that South Korea doesn't want any more currency swap and Japan thinks nothing profitable for the pact.

Right wing Japanese media is falsely using this issue to send out propaganda. Today, they are falsely reporting that Japan is refusing to swap with Korea, who is on its knees desperately begging. Many Japanese believe this, and are cheering. The 2ch forums have currently 15,000 posts cheering happily on Abe's fantastic move. It's as if many Japanese have their own alternate reality.

In reality though, the $70 billion swap between the two countries came to an end in 2012, when Japan ended it. There was also much rejoicing in Japan back then, with many Japanese thought that it would be the end of South Korea. Instead, the South Korean won strengthened, while the Japanese Yen has depreciated by 50% against the Korean Won.

And to all of you right wing Japanese reading this, don't believe your newspapers. South Korean government has not requested the Japanese government, for the swap to continue, nor have they said anything about the remaining swap (they probably don't even care about measily $10 billion which has depreciated to US $6 billion). South Korea's current account surplus last year was $90 billion last year, three times Japan's. The one who is in economic trouble is Japan who has a higher credit default risk rating, not South Korea (as often being falsely reported by Japanese media). The chances of an economic collapse by South Korea is nil. So Japanese should not pin their hopes on false propaganda reports.

South Korea doesn't want any more currency swap

SK requested not only the extension of the swap pact but also increase of the amount. Takeshima island is not the reason of this ending.

SK requested not only the extension of the swap pact but also increase of the amount. Takeshima island is not the reason of this ending.

No, South Korea didn't.

http://news.donga.com/3/00/20150130/69364958/1

Japan should be ashamed of its attempt to use a measly $10 billion swap to make their people feel superior. And it's Japan that needs more swap with Korea, considering Japanese Yen is now worthless and Japan's international credit rating is rated below South Korea's.

You devalue the crap out of your currency, and suddenly nobody wants it. the Feds $5 Trillion QE devalued the $ by a crap load, now its stopped and the US economy is recovering everybody wants the $ again. sorry but im glad your not my financial advisor.

South Korea doesn't need the swap with Japan, since they're in much safer position than Japan is at the moment. Unfortunately, only the Asahi newspaper seems to be the only paper that tells the facts on this swap truthfully. The rest of the Japanese media are using this as a jingoistic nationalistic purpose. I'm sorry to tell you this to Japan, but you should wake up and smell the coffee. South Korea doesn't care about this swap because they don't need it, and because their per capita income is surpassing Japan this year, thanks to Japan's falling off the cliff depreciating Yen.

Papi2013

South Korea surpassing Japan this year only shows yer reading too many Korean papers!

And even then Korean papers predict the shift for 2019/2020.

Don't forget other people can read too, prior to posting rubbish!

Peeping_Tom, the Moody's, World Bank, and also other non-Korean media says South Korea should start outstripping Japan in PPP per capital terms by end of this year.

But if you insist on going with nominal per capital income, IMF and Moody's are still predicting South Korea will surpass Japan even in nominal GNP per capital by 2019 - which is only four years away. Already we're seeing the signs of this, when we seeing that the average wages for South Korean workers are now above Japan's wages (and the gap is widening).

Peeping_Tom,

Why do you Japanese Nationalists keep looking at Nominal GDP Per Capita? That is a terrible metric for assessing standard of living because it doesn't account for income inequality and cost of living.

$20,000 in some nowhereville in Mississippi is worth a lot more than $70,000 in NYC.

Papi2013,

Although GDP Per Capita adjusted for PPP is far better than looking at its nominal value, it doesn't account for income inequality. You have to look at the median income adjusted for PPP. In this metric, SK has already surpassed Japan.

http://www.gallup.com/poll/166211/worldwide-median-household-income-000.aspx

Papi

The second part of your post is a repetition of what I had already said in mine; nothing new here.

The first part, I did not bother with because GDP (PPP) is only relevent domestically.

Come back when Korea outstrips Japan in GDP nominal, which could happen in 2019/20.

Or not!

Peeping_Tom, the IMF and Moody's reports were based on 2013 exchange rates when Japan's Yen still hadn't gone over 100 Yen to a US dollar. They based their Japan's per capita income on outdated data. It's now 120 Yen to dollar, and going lower, thus lowering Japan's per capita income (problem with nominal GNP calculations which overly fluctuates and distorts on changes in currency values). If things stay the same, with South Korea's economic growth at 3.7% and Japan 0%, while the Yen continues to devalue, based on current projections, the day the average Korean is richer than an average Japanese, could be a lot sooner than 2019. Thanks to Abe's money printing machine.

tinawatanabe: "SK requested not only the extension of the swap pact but also increase of the amount. Takeshima island is not the reason of this ending."

No, South Korea doesn't care. The "$10 billion currency swap" is a petty amount for SK when compared to the total agreement with other countries by SK. Based on my readings, SK was leaving the swap agreement with Japan, only as a friendly gesture. Yen is worthless; it will be devalued even further. It's not a smart move to buy Yen.

The Japanese government is trying to manipulate Japanese like you, so that you can falsely feel superior and be a good follower. Do some more research; then you will know. Read other sources, not only the ones from Japan.

" If things stay the same, with South Korea's economic growth at 3.7% and Japan 0%, while the Yen CONTINUES to devalue, based on current projections, the day the average Korean is richer than an average Japanese, could be a lot sooner than 2019. "

If! You said it yourself!

It might happen, but yer speaking as if it was an immutable certainty!

Nothing is certain in economics, just like predictions that China's GDP would outdo the US 50 times over in a century or so.

China's contracting now, ya no?

How do u know Korea will only go up and Japan down?

Peeping_Tom, we're talking less than five years here, not 30 years. Already the pattern is pretty clear, going by this Gallup poll of 2000 people in each countries, South Korea's average wages top out Japan's by a considerable margin.

http://content.gallup.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/jedu48c0d0oyrzdw5dupaq.png

Title is misleading for the agreement simply will expire next week and nothing more. Apparently, Korea has enough foreign reserves where such agreements are no longer needed. Could of swore they said the same thing back in 2008.

"Japan plans not to extend the pact unless South Korea sends us a request," the source who declined to be identified said.

The above sounds like Japan will not do it unless South Korea begs us on their knees. This is no way to deal with your neighbour. This government makes me feel ashamed of being a citizen of this country.

I can't believe we're revisiting this scenario again. We went through all this in 2012, when the $70 billion swap promise was expired, and the Japanese media and people were predicting S.Korea would collapse. South Koreans just scoffed and went about their business. Now this again... this time over a puny $10 billion swap which was still remaining, that nobody even remembers. Why would S.Korea come begging to Japan on their knees, over such small amount of money? Japanese people don't even know what a currency swap is. They think they're giving free money to S.Korea. And Japanese media and people once again predicting dire consequences for S.Korea. S.Koreans just roll their eyes.

From the media and comments here, it seems neither Korea nor Japan wanted to extend the swap.

Good. Finally something they did agree on.

"Why do you Japanese Nationalists keep looking at Nominal GDP Per Capita? That is a terrible metric for assessing standard of living because it doesn't account for income inequality and cost of living.

$20,000 in some nowhereville in Mississippi is worth a lot more than $70,000 in NYC."

1) I an not Japanese, thus cannot be a "Japanese Nationalist".

2) Whether you like it, or not, countries have to trade on the international marker place. For all its faults, GDP nominal is the better way to assess economics.

Now, if you're happy that $1 day in China is a good measure for a medium living standard, I would advise you to pack yer bags and leave Japan ASAP.

Why would S.Korea come begging to Japan on their knees, over such small amount of money?

Because they did so in the past.

Because they did so in the past.

Only in the parallel universe in Japan.

From the media and comments here, it seems neither Korea nor Japan wanted to extend the swap.

It would be foolish to extend a swap with a currency that is not even worth as much as the toilet paper that's written on. But Koreans still buy a crap loads of Japanese goods, despite Japan's hostile moves, ultimatums, and Japanese individuals boycotting Korean goods.

Only in the parallel universe in Japan.

Nope. 2009. This started with a measly $30 bil short term U.S. Swap which was subsequently followed by China with their Yuan swap and followed by Japan's increase of KRW-Yen swap equaling $20 bil. This still didn't solve the matter as KRW declined to 1500 level once again where Japan executed $70 billion worth of swap in 2011.

It would be foolish to extend a swap with a currency that is not even worth as much as the toilet paper that's written on.

I agree. KRW has shown this trend.

Nope. 2009. This started with a measly $30 bil short term U.S. Swap which was subsequently followed by China with their Yuan swap and followed by Japan's increase of KRW-Yen swap equaling $20 bil.

LOL.. Japan begged S.Korea to get in on the group to swap, after Korea signed swaps with US and China, well after the fire was put out. Then they had the nerve to demand Korea to lie to the world, that Korea had done the swap with Japan first.

This still didn't solve the matter as KRW declined to 1500 level once again where Japan executed $70 billion worth of swap in 2011.

Where did you get that from? Japanese press? The KRW never approached 1500 after the swap with the US in 2009.

Here's the historical data of the Korean Won in 2011, nowhere near 1500.

http://www.tradingeconomics.com/south-korea/currency

I agree. KRW has shown this trend.

Your currency devalued by 50% against the Korean currency the last two years. I wouldn't talk so bold.

http://www.xe.com/currencycharts/?from=JPY&to=KRW&view=2Y

Actually, hotmail, the value of the yen has decreased 23% against the won in the last 2 years. What kind of math did you use?

LOL.. Japan begged S.Korea to get in on the group to swap, after Korea signed swaps with US and China, well after the fire was put out. Then they had the nerve to demand Korea to lie to the world, that Korea had done the swap with Japan first.

This is the exact problem with Korea.

http://japanese.joins.com/article/575/117575.html?sectcode=A10&servcode=A00

Yoon Jeung-hyun, Ministry of Strategy and Finance in 2009

"韓国が最も厳しい時に外貨を融通してくれたのは、米中日の中で日本が最後だ"

"During our country MOST TROUBLED TIMES, the countries that loaned as the foreign currency were U.S., China, and Japan with Japan being the last to do so."

Where did you get that from? Japanese press? The KRW never approached 1500 after the swap with the US in 2009.

Correct to the following.

U.S./Korea swap-$30 billion USD (expiration 6 months which expired in 2009 after another 6 months renewal)

China/Korea Swap-Worth approx $30 billion (KRW-RMB swap with a three year expiration.)

Japan/Korea Swap of 2005 (Yen-KRW) was increased to from $3 billion to $20 billion.

Despite these measures, KRW again experienced a another crisis in February of 2009 where it reached 1,500 KRW/Yen levels.

In 2011, due to the European Financial Crisis the following agreements were agreed between Japan and Korea

Japan/KRW USD swap totaling $30 billion. Japan/KRW Yen swap worth totalling $30 billion. Additional $10 billion under Chiang Mai Initiative (MOF and Bank of Korea) which total $70 billion. CMI is the one in question which will expire next week.

Your currency devalued by 50% against the Korean currency the last two years. I wouldn't talk so bold.

It's not about devaluation. It's about other countries who are doing business with Korea thinks the KRW is worth more than a toilet paper once $hit hits the fan.

Again, I ask you, where are you seeing 1500 in 2011? It was below the 1200 line.

http://www.tradingeconomics.com/south-korea/currency

Actually, hotmail, the value of the yen has decreased 23% against the won in the last 2 years. What kind of math did you use?

OK, it depreciated 50% the last three years. Happy now?

apan/KRW USD swap totaling $30 billion. Japan/KRW Yen swap worth totalling $30 billion. Additional $10 billion under Chiang Mai Initiative (MOF and Bank of Korea) which total $70 billion. CMI is the one in question which will expire next week.

So the last $10 billion, is that the last of the swap? Anymore left somewhere in another account that I don't know about? Funnily, Korean won hasn't been affected by the news of the swap end. Where's the panic and when is S.Korea going to collapse?

Why did you stop the translation there? He said Japan was extremely stingy, and weren't helpful at all after the world financial crisis.

Yoon Jeung-hyun, Ministry of Strategy and Finance in 2009

"韓国が最も厳しい時に外貨を融通してくれたのは、米中日の中で日本が最後だ"

Given that there are two partys involved the article says nothing about how KR feels about this deal.

Jandworld, I seen exactly one article in Korean news. Nobody cares nor thinks about this at all in South Korea. But it's a very huge news in Japan where the Yahoo Japan and other Japanese internet forums have lighted up like a Christmas tree. It's very obscene to see how Japan could be so happy with wishful thinking over this type of event.

Ok, ok. We got it. Korea never needed it. Can we just let this go? Korea never needed it. Korea never made a good use of it. Japan begged for it. Ok. Can we agree? The great news is IT'S OVER AND DONE! Let's not do it again.

Can we just let this go?

You should direct that question to the Japanese, NYtoday. There's another huge headline in Sankei News today how South Korea is going to fail because Japan will not provide $10 billion in economic aid, as they claim.

So the last $10 billion, is that the last of the swap? Anymore left somewhere in another account that I don't know about? Funnily, Korean won hasn't been affected by the news of the swap end. Where's the panic and when is S.Korea going to collapse?

Like I stated, you seem to completely forgot the events that took place in 2008-2009 when Korea needed the swap.

Why did you stop the translation there? He said Japan was extremely stingy, and weren't helpful at all after the world financial crisis.

This is exactly the attitude of Koreans which is the reason why Japan should of never done a swap in the first place.