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| ▲ Finance Minister Choo Kyung-ho (2nd from R) speaks during a meeting with his Japanese counterpart, Shunichi Suzuki, in Tokyo on June 29, 2023, in this photo released by the Ministry of Economy and Finance. (PHOTO NOT FOR SALE) (Yonhap) |
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| ▲ Finance Minister Choo Kyung-ho (R) shakes hands with his Japanese counterpart, Shunichi Suzuki, in Tokyo on June 29, 2023, in this photo released by the Ministry of Economy and Finance. (PHOTO NOT FOR SALE) (Yonhap) |
(3rd LD) S Korea-Japan-currency swap
(3rd LD) S. Korea, Japan agree to resume US$10 bln currency swap deal
(ATTN: UPDATES with additional info in paras 6, 19)
By Kang Yoon-seung
SEOUL, June 29 (Yonhap) -- South Korea and Japan agreed to resume a US$10 billion currency swap deal, the finance ministry said Thursday, in the latest sign of a thaw in their economic relations.
The agreement was reached during a meeting between Finance Minister Choo Kyung-ho and his Japanese counterpart, Shunichi Suzuki, in Tokyo, according to the Ministry of Economy and Finance. The ministerial meeting was the first of its kind since 2016.
In 2015, the two neighbors terminated the currency swap amid strained bilateral ties.
The new arrangement, worth $10 billion, will be based on the U.S. dollar, facilitating the exchange of Korean won for Japan's greenback reserves, and vice versa, the finance ministry said.
The latest currency swap deal will run for three years, it added.
The bilateral currency swap began in 2001 with an initial volume of $2 billion, which grew to $70 billion in 2011 in response to the global financial crisis. However, due to the strained relationship, the amount has gradually declined, ultimately reaching $10 billion in 2015.
"(The currency swap agreement) shows that the relationship between South Korea and Japan is recovering quickly, even in the financial segment, since the bilateral summit in March," the ministry said in a statement.
South Korean President Yoon Suk Yeol made a rare visit to Tokyo in March for a summit with Japanese Prime Minister Fumio Kishida, becoming the first South Korean president to make such a trip to Japan in 12 years. Kishida reciprocated the trip with a visit to Seoul in May.
A currency swap is a tool meant to defend against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.
Currently, South Korea has currency swap arrangements with eight countries, including Canada, China and Australia. They, together with a multilateral arrangement involving the 10 member states of the Association of Southeast Asian Nations, are worth at least $138.2 billion, according the ministry.
The bilateral relationship had soured in 2019, as Japan imposed export curbs against South Korea in retaliation against the 2018 South Korean Supreme Court rulings ordering Japanese firms to compensate South Korean victims of forced labor during Japan's 1910-45 colonial rule of the Korean Peninsula.
Relations between South Korea and Japan began to thaw this year after Yoon offered to resolve the forced labor issue by compensating victims on South Korea's own without asking for contributions from Japan.
Earlier this week, Japan announced its plan to reinstate South Korea on its "white list" of trusted trading partners, about four years after the removal, in a move to improve the bilateral economic relationship.
During the ministerial meeting held in Tokyo, the two ministers also shared opinions on the latest economic situations around the globe, including the prolonged war between Russia and Ukraine, as well as global inflation.
In a joint press release, the two countries urged Russia to end its war against Ukraine, as it has led to inflation, and disruptions in the supply chain as well as energy and food prices.
To address challenges, including the fragmentation of the global supply chain and geopolitical risks, the two countries agreed to seek cooperation responsibly, the ministry added.
The two countries agreed to resume bilateral talks in the customs sector, which have been stalled since 2016, in the second half of this year to further expand exchanges.
The two ministers voiced concerns about the proliferation financing activities, encompassing the funding of North Korea's nuclear weapons development and intercontinental ballistic missile programs. South Korea and Japan vowed to expand cooperation to address such issues in the region.
On the margins of the event, the state-run Export–Import Bank of Korea inked a memorandum of understanding with Japan Bank for International Cooperation to seek cooperation in infrastructure projects in a third country.
Seoul and Tokyo also agreed to hold another financial ministerial meeting in South Korea next year to maintain their communication and cooperation, the ministry added.
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