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South Korea‘s negotiations with the U.S. on a trade deal to lower tariffs have stalled amid concerns over the foreign exchange implications of a $350 billion investment fund, part of an agreement reached with President Donald Trump in July. What has Japan agreed to? South Korean officials, who had argued that the package would mostly comprise loans and guarantees with limited direct investment, said last week they could not accept terms similar to those of a $550 billion investment package finalised this month by Japan. Tokyo agreed to transfer money within 45 days after the U.S. selects a project, and that available free cash flows from investments would be split evenly until they reached an allocated amount, after which 90% would go to the U.S. U.S. Commerce Secretary Howard Lutnick said on Thursday that there would be no flexibility for Seoul. “The Japanese signed the contract. The Koreans either accept that deal or pay the tariffs. Black and white, pay the tariffs or accept the deal.” How is South Korea’s situation different from Japan? Since South Korea’s deal was announced in late July, there have been concerns among market participants that the resulting dollar demand will overwhelm the domestic currency market, depressing the won. Since suffering traumatic capital flight during a financial crisis in the late 1990s, South Korea has retained a tight grip on its currency market. It started opening it to foreigners last year but there is still no offshore market to trade the won. The daily average global won trade stood at $142 billion in 2022, compared with $1.25 trillion for the Japanese yen, according to a triennial survey by the Bank for International Settlements. The won accounted for 2% of global market share, against 17% for the yen. Why is it South Korea is particularly worried? The won hit a 15-year low at the end of last year at around 1,476 to the dollar and now stands around 1,390. Market participants say the $40 billion needed by the state pension fund every year for its overseas investments is already a heavy burden on the currency. Citi estimated that the investment package would generate dollar demand of around $100 billion each year from 2026 to 2028. South Korea’s economy is much smaller than Japan’s. It had a current account surplus of $99 billion last year, compared with Japan’s surplus of nearly $200 billion, and central bank foreign reserves of $416 billion in August, compared with Japan’s $1.3 trillion. How is South Korea trying to mitigate the impact? The idea of seeking a foreign exchange swap line with the U.S. was raised publicly by Presidential Policy Secretary Kim Yong-beom last week, when he said the yen’s status as a key international currency and an unlimited swap line between Japan and the U.S. put Tokyo in a stronger position. Finance Minister Koo said last week there would be an announcement on foreign currency when tariff negotiations conclude and he told Reuters on Monday he thought the U.S. would “contemplate” a currency swap line, after a local media outlet said the government had passed the request to the U.S. Which countries have FX swap lines with the US? The U.S. Federal Reserve has standing swap line arrangements with the central banks of Canada, Britain, Japan, the European Union, and Switzerland. It established temporary swap lines of $60 billion each with the Bank of Korea and eight other central banks in March 2020 during the COVID-19 pandemic. After the swap line expired in December 2021, the Fed offered the Bank of Korea a safety net of $60 billion through repurchase agreements, enabling it to borrow dollars with its holdings of U.S. Treasuries as collateral. Jihoon Lee and Yena Park, Reuters
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E-Commerce
While some Barcelona residents sought to repel a tsunami of tourists with plastic water pistols, a neighborhood association in Santiago de Compostela opted for a friendlier approach: a guide to good manners for visitors to their town, the endpoint of the Catholic world’s most famous pilgrimage. Translated into several languages, the group posted it throughout the northwestern Spanish city and distributed it at its ever-growing number of hostels. It reminded tourists to keep noise down, respect traffic rules and use plastic protectors on hiking poles to avoid damaging the narrow cobblestone streets, among other things. To little avail, it would seem. Large groups still take over the streets singing hymns, bikes ride in the wrong direction and metal pole tips clatter against the ground. Santiago’s social media is awash with photos denouncing a lack of decorum. Tourists’ greater offense, though, stems from their sheer numbers; the old town and squares surrounding the cathedral holding the reputed tomb of Saint James the Apostle and that was the center of town life for a millennium today are almost exclusively the domain of outsiders, whose influx has served to expel residents. This dynamic has left Santiago emerging as the latest global destination where longtime residents have grown embittered by the overtourism transforming their community. We do not have tourism-phobia. We have always lived in harmony with tourism, but when it gets out of hand, when the pressure goes beyond what is reasonable, that is when rejection arises, said Roberto Almuía, president of the neighborhood association in the old town that’s a UNESCO World Heritage site. Scenery for visitors The Camino de Santiago, known in English as the Way of St. James, dates back to the 9th century, with pilgrims following its converging trails for up to hundreds of kilometers on paths originating in Portugal and France. The modern popularity it gained with the 2010 film The Way starring Martin Sheen was turbocharged more recently by social media and experience-driven travel after the coronavirus pandemic. Last year, a record half-million people signed up to trek one of the approved routes to the cathedral equal to five times the citys resident population, and marking a 725-fold increase over the last four decades. Added to those masses are ordinary tourists not arriving by trail. The proliferation of short-term rentals drove annual rent prices up 44% from 2018 to 2023, according to a study commissioned by the city council to the Fundación Universidade da Corua. That led municipal authorities in May to request the regional government classify the area as a high-pressure zone, like Barcelona or San Sebastian, which would help to limit rent increases. Already, last November, Santiago’s city council enacted a ban on Airbnb-style tourist accommodations in the historic center, arguing at the time in a statement that it was a necessity arising from its significant growth, which has clear effects on the number of housing units available for residents and on their price. Sihara Pérez, a researcher at the University of Santiago, described finding anywhere to rent in the city as mission impossible, while Antonio Jeremías, 27, told The Associated Press that he’s considering moving back in with his mother, because his salary working full-time at a warehouse isnt enough to make ends meet. Andrea Dopazo, 32, tried to move out of her parents house in a neighborhood located fully 5 kilometers (3 miles) from the city center. But her desire to continue living in the place where she grew up and community ties are strong proved futile, and she had to take something in a town outside Santiago. The only people who have been able to stay in the neighborhoods are those who have been lucky or unlucky enough to inherit an apartment from their grandparents, uncles or parents, said Dopazo, who works in human resources. Across Spain, there have been major street protests against unaffordable housing, with many linking the housing crunch to tourists gobbling up short-term rentals. Breaking the rules In the old town, tourists can stay in small hotels in former homes or huge hostels converted from former seminaries, which arent subject to the ban. But in the hustle to cash in, some short-term rentals are apparently flouting the restriction, evidenced by tenants collecting keys from lockboxes hung outside buildings. Some follow the rules and others dont, but this is the model that is really limiting residential housing, said Montse Vilar, from another neighborhood group, Xuntanza. Santiagos City Hall told The Associated Press in a statement that it is doing everything in its power to enforce the regulations and that it takes action whenever it detects a case of an illegal apartment housing tourists. Between 2000 and 2020, the historic center lost about half its permanent population, now reduced to just 3,000 residents who resist like the Gauls behind buildings’ thick stone facades, Almuía said. There are no hardware stores or newsstands left, and just one bakery. A couple grocery stores coexist with cafes, ice cream parlors and souvenir shops. The city has emptied out. You only have to take a walk to see that all we’ve got are closed, abandoned buildings that are falling apart, Almuía added. Spirituality This year, the number of pilgrims reaching Santiago is on track to set another record. The surge is further souring Santiago’s residents on their city’s tourism-centric economic model; already half of them rejected it as of 2023, up from just over one-quarter a decade earlier, according to a study conducted by Rede Galabra, a research group focused on cultural studies at the University of Santiago. Even some of the pilgrims are noting a shift, like Spaniards Álvaro Castao and Ale Osteso who met on the route four years ago and have returned every year since. The Camino is becoming more and more known, many more people are coming, Osteso said one recent morning at the end of their trek, among tour groups of pilgrims in bright, color-coordinated outfits and families snapping pictures. Spirituality seems to have been a little lost at times. Associated Press religion coverage receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. Teresa Medrano, Associated Press
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E-Commerce
Everywhere I go in the world to speak or advise companies, I hear the same complaint: No one listens to my ideas. I hear it from young professionals trying to launch their careers, mid-career managers navigating internal politics, and even senior leaders struggling to steer their organizations in a new direction. We like to believe that good ideas rise to the top, that if something is smart or right, people will naturally get behind it. But history shows thats not true. From antiseptics and cancer immunotherapy to Chester Carlsons Xerox machine, even the most breakthrough ideas faced fierce resistance. Countless others never saw the light of day. As the computing pioneer Howard Aiken put it, Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats. Getting traction has less to do with persuasion or even the importance of the idea itself than it has to do with power. If you want your ideas to have an impact, you need to learn how to build influence.
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