S. Korea Moves to Secure "Unlimited" Currency Swap with US
(MENAFN) South Korea has suggested a limitless currency swap with the United States as trade negotiations between the two nations continue to face significant obstacles, according to a local media report on Monday.
The proposal was made in the context of ongoing talks following a tariff agreement reached between the two countries in late July. Media reported that the currency swap was proposed as part of South Korea's strategy to safeguard its currency during the ongoing discussions.
As part of the framework deal, South Korea committed to investing $350 billion in the US, with Washington agreeing to reduce its tariffs on South Korean goods from 25% to 15%. However, a significant portion of the proposed investment is expected to come in the form of loans and credit guarantees. The US, however, is pushing for a larger portion of this investment to be in direct cash.
South Korea has voiced concerns over the potential impact of a massive dollar outflow, warning that it could lead to a significant rise in the won-dollar exchange rate.
As of the end of August, South Korea’s foreign reserves stood at $416.3 billion.
South Korean presidential spokesperson Kang Yu-jung said on Sunday that the two parties are still working out the details, making it challenging to provide a clear stance on each side's position.
In connection with the negotiations, South Korean Trade Minister Yeo Han-koo is set to travel to the US on Monday for further discussions on the trade agreement.
The visit follows the return of Industry Minister Kim Jung-kwan to Seoul, after a series of separate trade talks with US Commerce Secretary Howard Lutnick in Washington.
This is not the first time the two countries have explored currency swap arrangements. Previous agreements were made twice, during the 2008 global financial crisis and the 2020 COVID-19 pandemic.
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