Extension of Korea-Australia Currency Swap... Expanded to 9.6 Trillion Won

Extended for 3 Years Until February 5, 2023
20% Increase Based on Australian Dollar

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] South Korea and Australia have agreed to extend and expand the scale of their won-Australian dollar currency swap (exchange) agreement.

On the 6th, the Bank of Korea announced that it had extended the currency swap agreement with the Reserve Bank of Australia (RBA) by increasing the amount by 20% based on the Australian dollar. The original won-Australian dollar currency swap agreement was scheduled to expire on the 7th.

Accordingly, the currency swap agreement has been extended for three years from this day until February 5, 2023. The swap amount has also been expanded from 10 billion Australian dollars (approximately 9 trillion won) to 12 billion Australian dollars (960 billion won).

In case of maturity, extension is possible by mutual agreement between the two parties.

The Bank of Korea began negotiations to renew the currency swap agreement with the RBA in September last year. South Korea and Australia are major trading partners with a free trade agreement (FTA), and the trade volume between the two countries was about 28.5 billion dollars (approximately 33.6 trillion won) last year. Based on January to October last year, South Korea is Australia's fourth largest trading partner, and Australia is South Korea's eighth largest trading partner.

As financial sector linkages have strengthened, the foreign currency exposure of financial institutions in both countries has also increased. As of the end of last year, the foreign currency exposure of South Korean and Australian financial institutions was 5.63 billion dollars and 14.5 trillion won, respectively.

A Bank of Korea official explained, "This currency swap between the two countries was concluded to promote trade activation and enhance financial stability," adding, "Australia's sovereign credit rating received AAA from all three major international credit rating agencies, and the Australian dollar is a major international currency, ranking fifth in foreign exchange transaction volume as an International Monetary Fund (IMF) reserve currency."

He continued, "In a situation of high global uncertainty due to the spread of the novel coronavirus infection (Wuhan pneumonia) and geopolitical risks, we will further strengthen South Korea's multi-layered financial safety net along with the record-high foreign exchange reserves and existing bilateral and multilateral currency swaps."

This content was produced with the assistance of AI translation services.