S. Korea's $350B US Investment Delayed Amid Weak Won

Key Developments

South Korea's planned $350 billion strategic investment in the United States is unlikely to begin in the first half of 2026, according to Finance Minister Koo Yun-cheol. The delay is a strategic move to avoid significant dollar outflows that could further weaken the Korean won.

Current Market Situation

The decision comes as the won hovers near 16-year lows against the U.S. dollar. The trade agreement between the two nations includes an annual cap of $20 billion on these investment outflows. Minister Koo stated that given the current foreign exchange situation, substantial investments are improbable this year, as any project, such as a nuclear power plant, would require a lengthy process before major capital is deployed.

Economic and Market Impact

The delay aims to stabilize the national currency. The South Korean government is actively taking measures to support the won, with the minister warning traders against speculative behavior. U.S. officials have also expressed that the won's recent depreciation is not aligned with the country's strong economic fundamentals, signaling mutual interest in currency stability.

Summary

The timeline for the $350 billion investment package remains contingent on the stabilization of the Korean won. Market participants will be closely watching currency movements and policy actions from Seoul as indicators for the project's future commencement.

FAQ

Q: Why is the South Korean investment in the U.S. delayed?
A: The delay is primarily due to concerns over the weakening Korean won. The government aims to prevent large dollar outflows that could add more pressure to the currency.

Q: What is the total value of the planned investment?
A: The total planned investment is $350 billion, with an agreed annual cap on outflows of $20 billion.

Source: Investing.com