Australia and S. Korea to boost economic cooperation over currency swap

Australia and South Korea have agreed to enhance the financial cooperation between their central banks over the looming expiration of a currency swap arrangement which crucially consolidated the momentum to boost the bilateral cooperation.

Australia and South Korea have agreed to strengthen financial cooperation between their central banks over the looming expiration of a currency swap arrangement Source: Getty Images

The consensus was reached between Yoon Tae-sik, director-general in charge of international finance at the ministry, and his Australian counterpart, Lisa Elliston, at the Gwacheon government complex just south of Seoul, the ministry said.

The two sides said the 2017 swap agreement bolstered the momentum for bilateral cooperation.

The three-year deal allows for the exchange of up to 9 trillion won (US$7.5 billion) or A$10 billion in local currencies between the two central banks. Under the initial swap deal in 2014, the exchange of local currencies was set at up to 5 trillion won or A$5 billion.

The swap deal is set to expire on Feb. 7, 2020, and could be extended by consent from both sides.

A currency swap is a tool for defending against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.

South Korea has swap deals with Canada, China, Malaysia and Indonesia.