PPP lawmaker calls exchange rate 'a tax on ordinary people,' urges reset of currency cooperation with US

People Power Party lawmaker Yoon Sang-hyun called the exchange rate "a tax on ordinary people" and urged the government to rebuild its currency cooperation framework with the United States.

Yoon made the remarks Monday in a Facebook post, saying that "a rare scene played out in international financial markets in the latter half of last week." Japan actively intervened in currency markets to halt the yen's depreciation, and the US moved in step with Tokyo — the first such US-Japan coordination since the 2011 Great East Japan Earthquake, drawing wide market attention, he said.

He added that the yen had fallen to its lowest level in 40 years, prompting Japan to buy its own currency in defense of the yen, while the US joined the effort as pressure mounted to ease dollar strength. "That is precisely why this move carries even greater significance," he said.

Yoon said South Korea's foreign exchange authorities also stepped in to stabilize the market, with the won-dollar exchange rate falling sharply from around 1,550 won per dollar in early July to around 1,440 won by month's end. "The direction is clearly right, but there are points worth examining," he said. Japan secured substantive coordination with the US through joint market intervention, he said, whereas South Korea acted on its own — and no comparable joint response between Seoul and Washington was confirmed.

"Ultimately, Japan responded with the backing of US cooperation, while we had to defend the market on our own," he said. "This episode should serve as an opportunity to strengthen the Korea-US currency cooperation framework in a more substantive way."

Yoon also noted that the US Treasury had designated South Korea a currency monitoring country four consecutive times, and had recently assessed that the won's weakness was excessive relative to the country's solid economic fundamentals. "Even so, currency cooperation between Korea and the US is difficult to call sufficient compared with what Japan has," he said.

"The exchange rate is a tax that bypasses the National Assembly — money leaves citizens' wallets without a single vote," Yoon said. He argued that a weaker won pushes up the price of fuel, flour, feed and raw materials, squeezing the margins of market vendors and eroding the real incomes of salaried workers. "The impact is even greater for low-income households, who spend a larger share of their budgets on food and energy," he said. "A high exchange rate is a regressive tax that falls hardest on those who can least afford it."

He then laid out three requests for the government: rebuild the currency cooperation framework with the US from the outset; ensure that the won's recent strengthening actually feeds through to everyday consumer prices; and exercise caution before raising interest rates as a tool to stabilize the exchange rate.

Yoon said a rate hike offers no guarantee of exchange rate stability, but would certainly increase the interest burden on households and the self-employed. "We must not add to the burden on families carrying mortgage debt or small-business owners who took out loans to start their businesses," he said. "We cannot turn a blind eye to the reality of ordinary people hidden behind average figures."

"The recent exchange rate stabilization measures are a starting point, not a destination," he said. "If consumer prices remain unchanged even as the exchange rate falls, people will not feel the results of the policy." He stressed that what the government must manage is not the exchange rate figure itself, but the cost of living — and that policy can only be called a success when exchange rate stability translates into stability in people's lives.