Japan and South Korea agree to revive currency swap deal

A view of South Korean and Japanese national flags hoisted ahead of the arrival of South Korea’s President Yoon Suk Yeol and his wife Kim Keon-hee, at Tokyo International Airport (Haneda Airport) in Tokyo, Japan March 16, 2023. REUTERS/Issei Kato

TOKYO  -Japan and South Korea agreed on Thursday to revive a $10-billion currency swap deal to strengthen “the regional financial safety net” – a move that comes amid increased geopolitical risks and builds on improving bilateral relations.

The swap deal, which has never been put in action, was first agreed in 2001, designed as a tool to help the two countries cope in the face of a financial crisis. But it was allowed to expire in 2015 amid diplomatic tensions.

“There’s increased need to strengthen bilateral ties as global and regional economies face major uncertainty and risks,” Masato Kanda, Japan’s vice finance minister for international affairs, told reporters.

He added the currency swap deal was part of their ambition to promote cooperation in a range of areas.

At its peak in 2011, the deal was worth $70 billion.

The revived deal was struck between Japanese Finance Minister Shunichi Suzuki and his South Korean counterpart Choo Kyungho at a meeting in Tokyo on Thursday, marking the first dialogue between finance ministers of the two countries in seven years.

The ministers also discussed the global economy, infrastructure investment and debt problems in developing countries, and the role both countries could play in broader financial cooperation.

The next round of finance talks will be hosted by Seoul in 2024.

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