$350 Billion U.S. Investment Fund...Is a Bank of Korea-U.S. Treasury Currency Swap in the Works?

The South Korean government is reportedly pursuing a currency swap agreement with the Donald Trump administration in the United States, modeled after the "Argentina approach," in connection with the implementation of a $350 billion (approximately 497 trillion won) investment fund in the US. This is seen as a measure to minimize shocks to the foreign exchange market.

Previously, on October 9, Argentina signed a currency swap agreement not with the US Federal Reserve, but with the US Department of the Treasury. The US Treasury took the unusual step of directly purchasing Argentine pesos and providing dollars in exchange. In this process, the US Treasury utilized the Exchange Stabilization Fund (ESF). Bank of America, a US investment bank, highlighted the Argentina case, stating that "it could signal the beginning of a new US geopolitical strategy."

According to government officials on October 16, the South Korean government is discussing a swap agreement with the US side, based on the Korean won, in order to prevent instability in the foreign exchange market caused by a surge in short-term dollar demand during the formation of the US investment fund. The government is reportedly negotiating the details, including the size of the swap and the specific implementation method.

As of the end of September, South Korea's foreign exchange reserves stood at $422.02 billion, according to an announcement by the Bank of Korea on October 10. Given this, the government has determined that meeting President Trump's demand for an "up front" investment of $350 billion is realistically impossible, and is therefore seeking an indirect procurement method through a won-dollar swap.

Kim Yongbeom, Chief of Policy Office, Speaking Before Departure to the United States

(Yongjongdo=Yonhap News) Reporter Shin Hyunwoo = Regarding the follow-up discussions on the Korea-US tariff negotiations, Kim Yongbeom, Chief of the Presidential Office Policy Office, who is scheduled to negotiate with Howard Lutnick, US Secretary of Commerce, is speaking on October 16 before departing for Washington DC, USA, through Terminal 2 of Incheon International Airport. On the left is Kim Jeonggwan, Minister of Trade, Industry and Energy. 2025.10.16

Photo by Shin Hyunwoo

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Some observers predict that this could serve as a compromise that minimizes market shocks while also securing the trust of the US side.

On this day, Kim Yongbeom, Chief of the Presidential Office Policy Office, departed for the United States via Incheon International Airport to oversee the Korea-US negotiations, stating, "We view the negotiations positively."

In diplomatic circles, if the negotiations are concluded soon, there is speculation that the leaders of both countries may sign the final agreement at the Asia-Pacific Economic Cooperation (APEC) summit scheduled for the end of this month. In fact, following the meeting between the Korean and US finance ministers, both the fund agreement and tariff negotiations have made simultaneous progress, fueling expectations of a dramatic agreement just before the APEC summit.