SEOUL, Dec. 1 (Yonhap) — South Korea and Japan clinched a US$10 billion currency swap deal Friday, eight years after the former deal ended, amid signs of a thaw in their relations.
The Bank of Korea and the Bank of Japan signed the three-year deal based on the U.S. dollar, according to the central bank and the finance ministry.
In 2015, the two neighbors terminated the currency swap amid strained bilateral ties.
Their currency swap began in 2001 with an initial volume of $2 billion, which grew to $70 billion in 2011 in response to the global financial crisis.
However, due to the strained relationship, the amount has gradually declined, ultimately reaching $10 billion in 2015.
A currency swap is a tool meant to defend against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.
Currently, South Korea has currency swap arrangements with eight countries, including Canada, China and Australia. Together with a multilateral arrangement involving the 10 member states of the Association of Southeast Asian Nations, they are worth at least $138.2 billion, according to the ministry.
In June this year, Finance Minister Choo Kyung-ho and his Japanese counterpart, Shunichi Suzuki, agreed in Tokyo to resume the currency swap deal.