Japan and South Korea agree to renew $10 billion currency swap
In short
Japan and South Korea agreed to extend their currency swap arrangement while retaining its $10 billion limit. The agreement was reached at an October 15 meeting between their finance ministers in Bangkok; Japanese reports citing Korean media put the renewal period at three years.
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Japan and South Korea agreed to renew their bilateral currency swap arrangement while retaining a $10 billion ceiling, Japanese news outlets reported on October 15. Sankei and Nikkei, citing Korean media, said the renewed arrangement would run for three years, matching the term of the current agreement. [ 1 , 2 ]
The agreement was reached at a meeting between the countries' finance ministers in Bangkok on October 15. Nikkei reported that Japan's finance minister announced it at a press conference following the conclusion of the G20 finance ministers and central bank governors meeting in the Thai capital. South Korea's finance ministry also announced the agreement, Sankei reported. [ 1 , 2 ]
Under the arrangement, if either country faces a financial crisis, it can receive dollars held by the other in exchange for its own currency, Sankei reported. The South Korean ministry described the swap as a symbol of financial cooperation between the countries and said its importance had been taken into account in renewing it. [ 1 ]
Japan's finance minister said both countries' foreign reserve authorities held sufficient foreign currency liquidity. According to Nikkei, she said they nevertheless agreed to renew at the current $10 billion scale in view of its significance as a symbol of cooperation and coordination. The governments had concluded the existing three-year agreement in December 2023. [ 2 ]
Nikkei traced the arrangement to 2001, following the Asian currency crisis of the late 1990s. It said the swap expired in 2015 without an extension as bilateral relations worsened. The agreement was concluded again in 2023 after an eight-year gap, against a background of improving relations between the two countries. [ 2 ]
Why it matters
The arrangement allows either country to obtain dollars from the other in exchange for its own currency during a financial crisis. The governments described the renewal as a symbol of financial cooperation.
Key facts
- Japan and South Korea agreed to renew the currency swap while keeping the $10 billion ceiling. [ 1 , 2 ]
- Their finance ministers reached agreement in Bangkok on October 15. [ 1 , 2 ]
- Korean media reported that the renewal would last three years, Japanese outlets said. [ 1 , 2 ]
- The current agreement was concluded in December 2023 for three years, Nikkei reported. [ 2 ]