South Korea and the U.S. Extend $60 Billion Currency Swap Until End of September Next Year

Korea-US Currency Swap Extended for 6 More Months Until September 30 Next Year

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The $60 billion currency swap agreement between South Korea and the United States has been extended for an additional six months.

On the 16th (local time in the US, Korean time on the 17th), the Bank of Korea announced that it had agreed with the US Federal Reserve (Fed) to extend the expiration date of the current currency swap agreement from March 31 next year to September 30, extending it by six months.

In a press release on the same day, the Bank of Korea explained the background, stating, "Although the risk appetite in the international financial market has recovered and the domestic foreign exchange market is generally stable, we agreed that it is necessary to extend the currency swap proactively to respond to uncertainties caused by the resurgence of COVID-19."

A currency swap is a foreign exchange transaction in which different currencies are exchanged at a pre-agreed exchange rate when facing a crisis of foreign currency shortage. It is called a kind of "foreign currency safety net" that allows borrowing the counterpart country's currency when foreign currency runs out.

The Bank of Korea added, "We believe this maturity extension measure will contribute to maintaining stability in the domestic foreign exchange and financial markets," and "If necessary, we plan to immediately utilize the currency swap funds."

The Bank of Korea plans to continue efforts to stabilize the financial and foreign exchange markets through close cooperation with major central banks, including the US Federal Reserve.

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