S. Korea, US extend $60b currency swap deal by 6 months amid pandemic

(Yonhap)

SEOUL — South Korea and the United States have agreed to extend a $60 billion bilateral currency swap agreement by six months in an effort to help ease lingering market uncertainties amid the new coronavirus outbreak, the Bank of Korea (BOK) said Thursday.

In late March, the BOK and the US Federal Reserve signed the bilateral currency swap facility to help ease financial market jitters caused by the COVID-19 pandemic. The swap agreement, initially set to end on Sept. 30, will be extended until March 31, 2021.

“The US dollar and Korea’s foreign exchange markets have recently shown stabilizing movements, but as uncertainty sparked by the virus outbreak still lingers, the two sides have agreed to extend the swap agreement,” the BOK said in a statement.

On March 19, the Korean won fell by 40 won to end at 1,285.70 won against the US dollar, the weakest in over a decade amid the pandemic-sparked market turmoil.

Since then, the Korean currency has appreciated some 7.8 percent against the greenback. The local currency ended at 1,193.10 to the greenback Wednesday.

The BOK said that when needed, it will provide dollar-denominated loans to local banks via bidding by tapping the currency swap line.

The BOK supplied a combined $19.87 billion to banks by using the swap arrangement between March and May.

The latest currency swap deal marked the second of its kind to be signed with the US after a won-dollar swap line signed in October 2008 at the height of the global financial crisis.

South Korea currently has bilateral currency swap arrangements with eight countries, including Australia, Canada and China.

They, together with a multilateral arrangement involving the 10 member states of the Association of Southeast Asian Nations, are worth more than $193 billion, according to the BOK. (Yonhap)