Nagatachō, Chiyoda City, Tokyo, Japan — Prime Minister's Official Residence.
In the fifth-floor office, Prime Minister Goto Yujiro sat on the sofa with a grave expression. Flanking him on either side were Chief Cabinet Secretary Hirata Naoshi, Economic Planning Agency Minister Kobayashi, Finance Minister Sato Kazuya, and Bank of Japan Governor Kajiwara Yuki.
After looking around at those gathered, Prime Minister Goto suddenly burst out in an irritated voice, clearly at the end of his patience.
"Exchange rates have surpassed 140 yen, and you're just going to sit there and watch!"
As his thunderous shout echoed through the room, no one dared meet his eyes and instead glanced around uneasily. At last, Finance Minister Sato stepped forward with a troubled expression.
"We are working with the Bank of Japan to defend the exchange rate… but the selling pressure is simply too strong, and it's proving insufficient."
No sooner had the words left his mouth than Prime Minister Goto slammed his palm down hard on the sofa's armrest.
"So you think saying it's difficult is the end of it!"
"My apologies."
"I'm telling you to come up with countermeasures—not to spout that kind of nonsense!"
Even under the Prime Minister's piercing glare, Finance Minister Sato was unable to respond. Seated beside him, Governor Kajiwara spoke up cautiously, as if offering an excuse.
"It just so happened that right after we announced a plan to supply one trillion yen in short-term funds to stabilise the financial sector and purchase government bonds and stocks, reports broke in the United States warning that major Japanese banks and life insurance companies could face massive valuation losses on their equity holdings. That's what threw everything into disarray."
Kobayashi, the Minister of the Economic Planning Agency, who had been sitting opposite them, added in a sombre tone.
"There may have been concerns about a decline in the yen's value due to increased liquidity, but if the announcement had been limited to the short-term fund injection, it would have acted as a positive factor for the stock market. And if the Nikkei had shown signs of recovery, just as we had initially expected, the outflow of foreign investment might have slowed—or even reversed—helping to stabilise the exchange rate."
"So, an unexpected report out of the United States caused the two factors to mix, turning what should have been good news into bad."
Chief Cabinet Secretary Hirata, a stern-looking man in his sixties, frowned.
Kobayashi adjusted his gold-rimmed glasses and replied,
"It appears to have heightened fears that if major banks and life insurance companies were to post astronomical losses, the problem of non-performing loans could worsen, potentially escalating into a systemic financial risk."
"Hmm…"
Chief Cabinet Secretary Hirata let out a pained groan and muttered,
"To think that the short-term fund injection didn't reassure foreign investors, but instead made them see it as an opportunity to dump their stocks on the government and the Bank of Japan, convert their funds into dollars, and get out."
Governor Kajiwara glanced at Prime Minister Goto, who sat there with a deeply furrowed expression, then spoke in an even more subdued voice.
"As the exchange rate continues to surge, foreign investors are accelerating their sell-offs, trying to withdraw their funds before the yen falls further, which is only worsening the situation."
"Haa…"
Pressing his throbbing temples firmly with his hand, Prime Minister Goto raised his eyes sharply.
"If the economy has already been mired in a prolonged downturn and international oil prices are unstable, then if the exchange rate keeps surging as well, we'll be facing a situation the economy simply can't handle. So whatever it takes, we must prevent the exchange rate from rising any further!"
He turned his head toward Finance Minister Sato and issued an order.
"Immediately have the national pension fund carry out a large-scale additional sell-off of its U.S. Treasury holdings and use the proceeds to buy yen!"
At that, Chief Cabinet Secretary Hirata, who was seated to his left, hurriedly cut in.
"That won't do!"
"What do you mean? If we leave things as they are, there's no telling how high the exchange rate will go. Is this really the time to be picking and choosing our options!"
Prime Minister Goto responded in a sharp, cutting tone, his brow deeply furrowed.
Hirata Naoshi, the Chief Cabinet Secretary and a senior figure in the Liberal Democratic Party who had played a major role in elevating him to the position of Prime Minister, now openly opposed his directive—something Goto could not conceal his displeasure at.
In an instant, the air in the room turned icy. Everyone held their breath, watching the two men.
Under the Prime Minister's furious glare, Hirata spoke in a low, steady voice.
"I was about to report this anyway—I spoke with Treasury Secretary Kit just before entering the office."
"…!"
Prime Minister Goto narrowed his eyes and asked again.
"You mean the U.S. Secretary of the Treasury?"
"That's correct."
As Chief Cabinet Secretary Hirata gave a heavy nod, the room stirred with unease.
Given that they were already selling off large amounts of U.S. Treasury bonds to defend the exchange rate, a call from Secretary Kit could hardly bode well.
"What was it about?"
Prime Minister Goto asked, a hint of tension in his voice.
Meeting his gaze, Hirata replied with a hardened expression.
"He said the White House is deeply concerned that our excessive selling of U.S. Treasuries could hurt the international financial markets."
At those words, Prime Minister Goto's face twisted instantly.
"So they're telling us not to sell any more U.S. Treasuries."
"That's correct."
Goto flared up, raising his voice.
"No matter that it's the United States—this is blatant interference in our internal affairs!"
Amid the icy tension, Finance Minister Sato spoke cautiously, watching the room.
"It seems they're wary that our actions are driving down the price of U.S. Treasuries in the bond market."
Governor Kajiwara added with a stiff expression.
"Considering that the amount of U.S. Treasuries we've sold so far to defend the exchange rate has reached 8 billion dollars, it's understandable that the White House—already needing to increase its bond issuance due to the Iraq War—would find this uncomfortable."
"So you're saying we should just sit back and watch the exchange rate skyrocket like this!"
Just as Prime Minister Goto's voice was rising further in frustration, Chief Cabinet Secretary Hirata spoke in a serious tone.
"They warned that if we continue selling U.S. Treasuries and artificially intervening in the exchange rate like this, Japan could be designated a currency manipulator."
Hirata's words, like a bucket of cold water, caused not only Prime Minister Goto but everyone else in the room to grow grave.
A "currency manipulator" refers, quite literally, to a country whose government or central bank artificially adjusts its exchange rate for its own benefit.
While there are several criteria, the subjective judgment of the White House and the U.S. Treasury plays a decisive role.
If designated as a currency manipulator, investment by U.S. companies would be restricted, and participation in federal government procurement markets would also be prohibited.
In addition, comprehensive sanctions—including pressure through the International Monetary Fund (IMF)—would be imposed, making it devastating for the targeted country.
This impact would be especially severe for countries like South Korea and Japan, which have large export volumes to the United States.
"This is driving me insane."
Prime Minister Goto raised a hand and rubbed his face in frustration.
"If we really end up being designated a currency manipulator at this point, the situation will become even more serious."
"I know that!"
Leaning forward slightly, Chief Cabinet Secretary Hirata spoke in a calming tone.
"I understand you're angry, Prime Minister, but we're already under attack from speculative forces. We can't afford to make an enemy of the United States as well."
"So you're saying we should just leave the exchange rate as it is?"
"We have no choice but to halt the sale of U.S. Treasuries for now and use other measures to prevent the yen from falling any further."
"Damn it."
Prime Minister Goto clicked his tongue with a displeased expression.
If such a method had existed, they would have used it long ago.
But he also knew they couldn't afford to openly confront the United States, which only made his face twist as if he had bitten into something bitter.
"It's no different from being sent onto the battlefield with one arm tied behind our back."
Goto muttered in a tone of resignation.
The other three men, already aware of how dire the situation was, grew even more sombre at the thought that defending the exchange rate would only become more difficult from here on.
***
The next day.
Seok-won, who had been sitting at his desk reviewing a political trends report compiled by Lee Cheol-gyun, looked up at the sound of a light knock.
Seeing Hyun Dong-jin, the president of SA Oil—whose strong, rugged features left a firm impression—entering the room, he closed the report and rose to his feet.
"Welcome."
"Excuse me."
As President Hyun gave a polite bow, Seok-won gestured toward the sofa by the window.
"Let's sit and talk."
Once Seok-won took the seat of honour, President Hyun naturally sat down on the sofa to his right.
"This is the performance report for the last quarter."
President Hyun Dong-jin said as he respectfully held out the approval folder he had brought with him.
"I see."
As Seok-won took the folder and opened it, President Hyun spoke with confidence.
"As you can see, during the fourth quarter of last year, we recorded 3 trillion 139.1 billion won in revenue and 520.1 billion won in net profit."
Watching Seok-won give a small nod as he skimmed through the report, Hyun continued.
"Compared to the same period the previous year, revenue increased by 57%, and net profit rose by 64.8%."
"Not a bad performance."
Seok-won gave a faint smile as he closed the folder and set it down on the table.
"Following your directive, we significantly increased our crude oil inventory beyond usual levels, which played a major role. With oil prices surging due to the Iraq War, it had a decisive impact on the increase in both revenue and net profit."
President Hyun Dong-jin looked at Seok-won with eyes that shone so intensely it was almost burdensome.
In truth, when he had first been told to purchase as much physical crude oil as possible—not only using available cash but even taking on debt—he had been deeply taken aback and plunged into serious deliberation.
He was well aware that oil prices were likely to rise, given the high possibility of the United States going to war with Iraq.
However, being instructed to buy such an enormous volume that it would exceed storage capacity was enough to drive anyone in charge of operations to the brink of madness.
[Even if we fill the spare storage space at the crude oil reserve facilities we've arranged to lease from the Korea National Oil Corporation, we still won't have enough storage tanks.]
[Then lease oil tankers on long-term contracts and keep them floating out at sea.]
[We're not talking about just one or two vessels—storing the volume you're proposing would mean enormous chartering costs. Even if international oil prices rise, the expenses could end up being higher, and we might incur losses.]
[That won't happen, so just do as I say.]
Watching Seok-won issue such forceful, uncompromising orders, President Hyun Dong-jin let out a deep sigh inwardly.
He knew Seok-won had delivered remarkable investment results so far, but analysing numbers on a monitor and managing physical assets were entirely different matters.
Before long, war broke out, and international oil prices surged. Seeing this, Hyun felt a wave of relief and let out a long breath.
But that relief was short-lived.
Contrary to expectations that Iraqi forces would put up fierce resistance, U.S. troops advanced rapidly and easily captured Baghdad, the capital. As a result, international oil prices plunged almost immediately.
The moment he saw prices fall even below pre-war levels, his vision went dark at the thought that he would be saddled with massive losses.
Then, as if by some unbelievable twist, a series of negative developments erupted all at once, sending international oil prices soaring again and completely reversing the situation in an instant.
The tens of millions of barrels of crude oil—stored in reserve facilities and loaded onto dozens of oil tankers floating off the coast of Ulsan—were transformed overnight from burdensome inventory into a mountain of gold.
With international oil prices now exceeding $28 per barrel, just thinking about the oil tankers off the coast of Ulsan was enough to make Hyun Dong-jin feel full without even eating.
"The shareholders' meeting is scheduled to be held in two weeks, correct?"
"That's right. Given the strong performance, it looks like this year's meeting will proceed in a very amicable atmosphere."
President Hyun Dong-jin replied with a light laugh.
"There's one additional agenda item, so have it approved through the board of directors and then notify the shareholders."
Since the notice for the shareholders' meeting had already been sent out, Hyun looked puzzled at the mention of an added agenda.
"An additional agenda item?"
At that, Seok-won flashed a grin, baring his white teeth.
"It's a share buyback and retirement proposal."
"…!"