South Korea’s trade deal with Trump could sink its currency and trigger a financial crisis

Core Viewpoint - President Trump's demand for South Korea to transfer $350 billion in cash could severely impact South Korea's financial markets and economy, with ongoing negotiations highlighting tensions between the two nations [1][6]. Group 1: Financial Implications - South Korea's foreign exchange reserves stand at $410 billion, and a sudden transfer of $350 billion could destabilize the won, reminiscent of the 1997 financial crisis [3]. - The Bank of Korea and the Federal Reserve could establish a swap line to provide dollar liquidity, potentially mitigating shocks to foreign-exchange markets [4]. Group 2: Comparison with Japan - South Korea argues that its financial situation differs significantly from Japan's, which has $1.3 trillion in reserves and a more internationally recognized currency, the yen, which holds a 17% global market share compared to the won's 2% [5]. Group 3: Political Dynamics - President Lee Jae-myung has warned that U.S. demands could lead to a financial calamity similar to past crises, but Trump remains firm on requiring the payment "upfront" [2][6]. - The recent raid on a Hyundai plant in Georgia, resulting in the arrest of Korean workers, has further strained U.S.-South Korea relations [6][7].