Moon has previously made similar comments, despite outside worries that any lifting of sanctions would weaken U.S.-led efforts to eliminate North Korea's nuclear arsenal. His latest overture came about two weeks after North Korean leader Kim Jong Un threatened to bolster his nuclear deterrent in the face of what he called "gangster-like" U.S. pressure and sanctions.

Moon said at a New Year's news conference Tuesday that improved inter-Korean cooperation would spur progress in stalemated nuclear diplomacy between North Korea and the U.S. and help gather international support for sanctions exemptions.

"If exceptions from U.N. sanctions are necessary for South-North cooperation, I think we can make efforts for that," Moon said. "I think there is a heightened need for South and North Korea to dial up their cooperation a little bit and promote North Korean-U.S. talks, rather than just looking at North Korea-U.S. talks."

Moon acknowledged that efforts to boost inter-Korean ties would have limits because of the U.N. sanctions. But he said exchanges in sports and South Korean tours to North Korea are among the areas where the two Koreas can cooperate without violating the U.N. sanctions.

It was unclear how North Korea would respond to Moon's comments. The North recently has ignored his calls for dialogue and pressed South Korea not to meddle in negotiations with the United States.

Inter-Korean relations have suffered big setbacks since the breakdown of Kim's second summit with President Donald Trump in February 2019 in Vietnam. That summit collapsed because Trump rejected Kim's demands for broad sanctions relief in return for dismantling his main nuclear complex, a limited disarmament step.

The development was a blow to Moon, a liberal who espouses greater reconciliation with North Korea. He shuttled between Kim and Trump in 2018, facilitating the early parts of U.S.-North Korean diplomacy such as the first Trump-Kim summit in Singapore in 2018

Some experts say North Korea is angry with the South because it believes Moon's push led it to waste time and make too many concessions in negotiations with the U.S.

During a key ruling party meeting late last month, Kim expressed deep frustration over the deadlocked diplomacy and pledged to bolster his nuclear arsenal. He also said he would unveil a new "strategic weapon" soon and no longer be bound by a weapons test moratorium that he placed at the start of his diplomacy with Trump.