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S. Korea, Turkey sign first currency swap

All News 14:00 August 12, 2021

SEOUL, Aug. 12 (Yonhap) -- 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 (US$2 billion), the BOK said in a statement.

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.

The logo of the Bank of Korea in front of its headquarters in central Seoul (Yonhap)

In June, the BOK and the U.S. Federal Reserve reached an agreement to prolong their US$60 billion currency swap, which was due to expire on Sept. 30, by another three months through Dec. 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.

kdh@yna.co.kr
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