Korea signs currency swap deal with UAE, agrees to sign similar deal with Indonesia
Korea and Indonesia have agreed to sign a currency swap deal worth 10 billion U.S. dollars.
The agreement was reached during a meeting in Washington on Saturday local time between Korean Finance Minister Hyun Oh-seok and his Indonesian counterpart.
The currency swap line will expire in three years, but can be renewed upon agreement.
At the same meeting, the head of Korea's central bank Kim Choong-soo signed a three-year currency swap deal worth 5.4 billion dollars with the United Arab Emirates.
The agreements can be used in settling payments for their bilateral trade.
Indonesia is Korea's eighth-largest trading partner, with their trade volume valued at around 30 billion dollars last year.
Most of Korea's imports from the Southeast Asian nation are natural resources, such as iron and gas.
Around one-tenth of Korea's crude oil imports last year were shipped from the UAE, Korea's third-largest trading partner among Middle Eastern countries.
Both deals are expected to facilitate Korea's imports of natural resources and also help the globalization of the Korean won.
The Korean government wants to use currency swap deals with emerging countries to settle payments for trade in an effort to reduce its dependence on the U.S. dollar.
The Korean finance minister hinted of additional agreements to come, saying Seoul is in talks with a few more emerging countries that are rich in resources and have strong trade links with Korea.
For emerging countries, a currency swap deal with Korea provides a second line of defense amid an acceleration in the outflow of foreign currency triggered by growing fears over the U.S. Federal Reserve's plan to taper its massive monetary stimulus program.
Hwang Sung-hee, Arirang News.
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