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By Kang Yoon-seung
BANGKOK, Oct. 15 (Yonhap) -- South Korea has agreed with Japan to extend their US$10 billion currency swap arrangement, set to expire next month, by another three years, the finance ministry said Thursday, as the two countries seek to further bolster bilateral economic ties.
Finance Minister Lee Hyoung-il reached the agreement with his Japanese counterpart, Satsuki Katayama, during a meeting in Bangkok on the sidelines of the 2026 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group.
The two countries' three-year, $10 billion currency swap deal, signed in December 2023, was due to expire in November.
Finance Minister Lee Hyoung-il (R) shakes hands with his Japanese counterpart, Satsuki Katayama, in Bangkok on Oct. 15, 2026, in this photo released by the Ministry of Finance and Economy. (PHOTO NOT FOR SALE) (Yonhap)
Under the latest agreement, the currency swap arrangement, which involves the U.S. greenback, will run through November 2029, with its size unchanged.
A currency swap is a tool designed to guard against financial turmoil by allowing a country facing a liquidity crunch to borrow foreign currency in exchange for its own currency.
The two countries' currency swap arrangement expanded from $2 billion in 2001 to $70 billion in 2011 amid global financial uncertainties.
The arrangement, however, expired in 2015 and remained dormant for more than eight years amid strained bilateral relations.
In 2023, the two countries agreed to revive the arrangement with a new structure based on the U.S. dollar. Under the deal, South Korea can borrow dollars from Japan in exchange for the Korean won, while the Asian neighbor can do the same in exchange for the Japanese yen.
During the meeting, the officials concurred that the foreign exchange authorities of both countries currently maintain ample liquidity, describing the currency swap arrangement as a symbol of bilateral cooperation.
The two sides discussed ways to expand bilateral exchanges in the economic and financial sectors, the ministry added.
They also agreed to hold a ministerial meeting in South Korea as soon as possible.
This photo, taken Oct. 14, 2026, shows the venue of the 2026 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group in Bangkok. (Yonhap)
colin@yna.co.kr
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