Government States "NCND"... Korea-U.S. Currency Swap Talks Resurface Amid Iran War

by Jo Youjin

Published 28 Apr.2026 11:30(KST)

Updated 28 Apr.2026 14:29(KST)

Deputy Prime Minister and Minister of Finance and Economy Koo Yoon-chul visited the U.S. Department of the Treasury on the 17th (local time) to attend the G20 Finance Ministers' Meeting and the International Monetary Fund (IMF) and World Bank (WB) Spring Meetings, where he held a bilateral meeting with U.S. Treasury Secretary Scott Bessent. Ministry of Finance and Economy

It has been confirmed that South Korea is among the countries exploring the possibility of a currency swap with the United States in response to the aftermath of the Middle East war involving Iran and the U.S. This comes as the U.S., which previously rejected South Korea’s request for a currency swap during bilateral investment negotiations by stating that "South Korea has sufficient U.S. dollars," is now expanding cooperation with a number of countries severely impacted by the Iran war to strengthen the dollar’s hegemony, including discussions on foreign exchange supply measures.

According to political sources and relevant ministries on April 28, Deputy Prime Minister and Minister of Finance and Economy Koo Yoon-chul and U.S. Treasury Secretary Scott Bessent met in Washington, D.C., on April 19-20 during the G20 Finance Ministers and Central Bank Governors’ Meeting to discuss possible cooperation measures in the foreign exchange market. Deputy Prime Minister Koo was accompanied by the Assistant Vice Minister for International Finance, the Head of Foreign Currency Funds, the Head of the International Monetary Team, and the Head of Financial Cooperation, who is in charge of currency swaps. It has been reported that discussions related to a currency swap also took place at this meeting.

Regarding the possibility of pursuing a currency swap, an official from the Ministry of Finance and Economy stated, "It is difficult to comment specifically on the discussions taking place between the authorities of the two countries," adding, "We will neither confirm nor deny (NCND)." This cautious stance appears to reflect concerns that even discussing a currency swap with the U.S. could send the wrong signal to the market, suggesting a shortage of U.S. dollars.

Previously, Secretary Bessent met with Khaled Mohamed Balama, Governor of the Central Bank of the United Arab Emirates (UAE), who was visiting Washington, D.C. for the G20 event, to discuss the idea of a currency swap line. The UAE side conveyed that the impact of the Iran war is spreading beyond the energy market to the financial markets, necessitating measures to address a potential dollar shortage. If such a shortage materializes, the UAE indicated it may have no choice but to shift crude oil sales and transaction settlements to the Chinese yuan, thereby increasing its negotiating leverage with the U.S.

Although South Korea’s foreign exchange reserves stand at USD 423.6 billion and its net external financial assets have maintained a surplus trend of over USD 1 trillion, there are no issues with its external soundness. However, with USD 350 billion invested in the U.S. and the external risks posed by the Middle East war coinciding with a high exchange rate environment, concluding a currency swap agreement with the U.S. could become a significant factor in stabilizing market sentiment and influencing the direction of the exchange rate.