South Korea, Turkey Sign First Currency Swap
Category: General
South Korea and Turkey have signed their first currency swap agreement that will enable both countries to provide liquidity for the counterpart in case of domestic financial instability, the Bank of Korea (BOK) said Thursday.
The three-year agreement, signed by the BOK and the Central Bank of the Republic of Turkey, allows for the exchange of local currencies between the two countries of 2.3 trillion won ($2 billion), the BOK said in a statement to Yonhap News Agency.
The deal can be renewed through a bilateral agreement, according to the BOK.
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.
The BOK said the currency swap deal with Turkey is also expected to ensure the stability of bilateral trade.
In June, the BOK and the U.S. Federal Reserve reached an agreement to prolong their $60 billion currency swap, which was due to expire on September 30, by another three months through December 31, in a move to ease market uncertainties in South Korea over the COVID-19 pandemic.
South Korea has other bilateral currency swap arrangements with seven countries, including Australia, Canada and China.
SOURCE BAHRAINNEWSAGENCY
12 Aug, 2021
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