Agreement to Extend $60 Billion Korea-China Currency Swap Deal

Bank of Korea "Extension of Korea-China Currency Swap Expected to Stabilize Regional Finance"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] South Korea and China have agreed to extend their currency swap agreement. A currency swap is a contract that allows the two countries to exchange currencies with each other at a pre-agreed exchange rate in case of emergencies.

On the 22nd, the Bank of Korea announced that it had agreed to extend the Korea-China currency swap agreement signed with the People's Bank of China.

In this renewal contract, it was decided to expand both the scale and duration compared to the existing contract. The scale is $60 billion (approximately 70 trillion won / 4,000 yuan), making it the second largest currency swap Korea has signed after the United States ($60 billion). The contract period was also agreed to be extended from the existing 2 years to 5 years.

The two countries signed the currency swap to promote bilateral trade, stabilize financial markets, and support liquidity for financial institutions operating in the counterpart country.

The Bank of Korea stated, "It is expected to contribute to regional financial stability by ensuring that trade payments can be settled in domestic currency even during periods of high volatility in international financial markets."