S. Korea downgrades Japan trade status, Japan says the move is “regrettable”

The South Korean Ministry of Trade, Industry and Energy said in a statement on Wednesday, it had approved plans to remove Japan from its “white list” of countries with fast track trade status, responding to Japan’s action of dropping the South from the preferred trade status list late last month, per Reuters.

The Ministry said that tighter trade regulations take effect immediately on Wednesday.

The statement read: “The purpose of the amended trade regulations is to improve South Korea’s export control system, not retaliation against Japan.”

The trade spat between the two Asian economies has deteriorated after South Korea filed a complaint against Japan on export curbs. The trade row is over the issue that Japanese companies should compensate South Koreans who were conscripted as forced laborers during World War Two.

Meanwhile, Japanese Industry and Trade Minister Sugawara responded, as saying that South Korea’s decision to remove Tokyo’s fast-track trade status without sufficient explanation was “regrettable”.

USD/JPY holds its range around 108.20 levels so far this Wednesday while USD/KRW extends its four-day winning streak, currently trading +0.35% near five-day highs of 1,190.71.