Swap deal with China imminent: sources

SEOUL, Nov. 4 (Yonhap) -- South Korea is seeking a US$10-30 billion currency swap
deal with China as talks between the two nations are nearing an end, government
and central bank officials said Tuesday.
Currently, the two countries have a currency swap contract under which South
Korea could borrow up to $4 billion from China. The deal for an extended swap, if
realized, would provide an additional liquidity line for South Korea at a time
when its foreign currency reserves are on a decline.
"Talks are now underway with China regarding a currency swap," a high-ranking
government official told Yonhap News Agency. "It will take some time, but (a
deal) is not that far away."
Another official close to the matter said, "The swap deal with China will be
around $10 billion to $30 billion, given a recent similar arrangement with the
United States."
South Korea has been seeking extended currency swap deals with China and Japan as
part of efforts to secure enough dollars to ride out the ongoing financial
turbulence. Companies and banks are having difficulty servicing debts and paying
for business activities.
On Thursday, the Bank of Korea, the nation's central bank, announced a $30
billion swap agreement with the U.S. Federal Reserve. It will accelerate the
drive for similar deals with the two Asian countries, Finance Minister Kang
Man-soo said earlier.
South Korea's foreign reserves have been on a sharp decline as the government
stepped up intervention to prop up the sliding won against the greenback. As of
the end of October, the nation's foreign reserves amounted to $212.30 billion,
down $27.40 billion from a month ago. China held $1.9 trillion at the end of
September.
Talks with Japan are also underway, but "progress has not been made as much as in
talks with China," a government source said. South Korea currently has a $13
billion currency swap deal with Japan.
kokobj@yna.co.kr
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