Presented by Roger Blitz. Produced and filmed by Filip Fortuna and James Sandy. Edited by Paolo Pascual.
Talks between North and South Korea raise hopes of a thaw in tensions on the peninsula. But South Korea knows it needs to tread carefully with Washington. There are three difficulties. First, it must engage with dialogue with the North without undermining America's hardline strategy.
Second, it must also negotiate a new trade deal with the US. And third, it must be careful not to upset the US over how it handles its currency strength. South Korea's currency, the won, was the best performing emerging market currency last year.
And it should head higher, thanks to a powering economy, a healthy surplus, strong equity inflows, and the Bank of Korea beginning to raise rates. But a fast-appreciating currency threatens exporters. So the Bank of Korea has been talking down the currency this week, alongside rumours of actual intervention.
South Korea must know the risks. Trade talks are getting under way to renegotiate what Donald Trump has called a horrible deal. The country remains on the US Treasury Department's list of those it monitors for possible currency manipulation. So its central bank is "playing a bit with fire," says one currency strategist.
Other Asian countries will beware. In a dollar bearish market, most of their currencies are also likely to move higher. Thailand, for one, is also sounding the alarm over the baht's appreciating value. And more Asian central banks may also jawbone about rising currency values.
South Korea's currency options are limited. But since its private sector is enjoying this global upswing as much as anyone, it should be able to withstand the pain.