By Jihoon Lee
SEOUL (Reuters) -South Korea’s chief presidential policy adviser said on Thursday he was “optimistic” about talks to finalise a trade deal with the U.S., the latest remark by an official pointing to progress in negotiations that helped fuel an auto-led stock market rally.
Kim Yong-beom and Industry Minister Kim Jung-kwan spoke to reporters before departing for the United States. They will be joining Finance Minister Koo Yun-cheol and Minister for Trade Yeo Han-koo for follow-up negotiations in Washington.
Kim’s comments echo Minister Koo’s remarks earlier this week that there was “huge progress” and Foreign Minister Cho Hyun saying there were “positive signals” in reaching a deal.
On the U.S. side, Treasury Secretary Scott Bessent said on Wednesday the countries were close to finalising a trade deal and he expected an announcement in the next 10 days. Seoul has been seeking to reach a deal by late October when U.S. President Donald Trump is due to visit the country for an Asia-Pacific summit.
Seoul has been concerned over the foreign exchange implications and the structure of a $350 billion investment package included in a preliminary deal reached in late July. It has asked Washington for a safeguard, such as a currency swap line, to prevent any currency market impact, along with other measures to guarantee “commercial feasibility”.
South Korea’s benchmark KOSPI stock index rose 2.5% to a record high on Thursday. Shares of Hyundai Motor surged 8.3% to a one-year high and sister automaker Kia jumped 7.2% on hopes of a cut in auto tariffs, to 15% from 25%, promised in the July deal.
“There was some response from the U.S. about foreign exchange risks, but more work is still needed on a bigger framework and the text of the agreement,” a trade official said.
Wi Sung-lac, South Korea’s top national security adviser, clarified at a briefing held later in the day that there was no progress in discussions with the U.S. Department of the Treasury about setting up a currency swap.
“Even if it is set up…there also have to be sufficient conditions, but no progress has been made in that area,” Wi said, amid local media reports that various tools were being discussed for a currency safeguard.
Kim Jin-wook, an economist at Citi, said in a report that the odds of a partial compromise after a prolonged deadlock appeared to have risen with three conditions.
The conditions are faster-than-expected timing for reaching a deal, no change in the headline figure of $350 billion and a form of safeguards to mitigate currency risks instead of an unlimited central bank dollar swap line, Kim said.
(Reporting by Jack Kim, Jihoon Lee, Hyunjoo Jin and Joyce LeeEditing by Ed Davies)
