Korea, China agree to re­new cur­rency swap

The Korea Times - - FRONT PAGE - By Nam Hyun-woo namhw@ktimes.com

Korea and China have agreed to ex­tend their cur­rency swap deal — the first agree­ment be­tween the two gov­ern­ments since a slow­down in their eco­nomic re­la­tion­ship fol­low­ing the in­stal­la­tion of a U.S. anti-mis­sile shield here.

The ac­cord, which came three days af­ter the deal ex­pired, calls for the two coun­tries to ex­tend their cur­rency swap worth 64 tril­lion won ($55 bil­lion) for three years.

Min­is­ter of Strat­egy and Fi­nance Kim Dong-yeon and Bank of Korea Gov­er­nor Lee Ju-yeol an­nounced the re­newal of the agree­ment in Wash­ing­ton where they are at­tend­ing the meet­ing of G-20 fi­nance min­is­ters and cen­tral bank gover­nors.

“It took ef­fect Oct. 11. Tech­ni­cally, it is a re­newed deal, but it is the same as an ex­ten­sion,” Kim said.

De­spite the ex­pi­ra­tion, nei­ther the cen­tral bank nor the fi­nance min­istry dis­closed the sta­tus of the ne­go­ti­a­tions, draw­ing con­cern that the deal could end due to the diplo­matic fric­tion be­tween Seoul and Bei­jing.

“The two coun­tries drew up the agree­ment Oct. 10, but de­layed the an­nounce­ment due to tech­ni­cal rea­sons,” Lee said.

A cur­rency swap is a fi­nan­cial buf­fer since a coun­try can bor­row for­eign funds against its own cur­rency. Af­ter suf­fer­ing a mas­sive out­flow of cap­i­tal dur­ing the 1997 Asian fi­nan­cial cri­sis, Korea has been ac­tively sign­ing cur­rency swap deals.

The won-yuan deal was signed in De­cem­ber 2008 and went through a se­ries of ex­ten­sions and ex­pan­sions. It is the largest deal that Korea has inked with a for­eign coun­try. By com­par­i­son, it has signed deals with In­done­sia for $10 bil­lion and Aus­tralia for $7.7 bil­lion.

The pro­longed ne­go­ti­a­tions had been at­trib­uted to the two coun­tries’ raised ten­sion over the de­ploy­ment of the Ter­mi­nal High Al­ti­tude Area De­fense (THAAD) sys­tem be­cause they had been fa­vor­able on ex­tend­ing the deal.

In 2015, a sim­i­lar agree­ment be­tween Korea and Ja­pan was ter­mi­nated with two of the known fac­tors be­ing his­tor­i­cal and ter­ri­to­rial is­sues in­clud­ing for­mer Pres­i­dent Lee Myung-bak’s visit to the Dokdo islets in 2012.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.