S. Korea, Japan expected to extend currency swap line: official

PHUKET, Thailand, Feb. 23 (Yonhap) -- Japan will likely extend its bilateral currency swap facility with South Korea, helping Seoul secure a tightened safety net for a possible financial crisis, a top Seoul financial policymaker said Monday.

"We expect that the currency swap arrangement with Japan will be extended
automatically if there are any particular problems," Deputy Finance Minister Shin
Je-yoon told Yonhap News Agency. "Of course, this is an issue to be decided by
Japan's central bank but we believe things will be done in a good direction."
Shin didn't elaborate on its duration and size. He is currently in Thailand to
accompany Finance Minister Yoon Jeung-hyun for a meeting with his counterparts
from Southeast Asian countries along with Japan and China.
South Korea and Japan have a US$20 won-yen currency swap pipeline. South Korea
also has a 38 trillion won ($25.1 billion) three-year swap arrangement with China
and it recently extended the $30 billion swap deal with the U.S. by six months
until October.
On Sunday, finance chiefs of 10 ASEAN member countries plus South Korea, Japan
and China agreed here to expand the size of their joint currency pool to $120
billion from an earlier-proposed $80 billion in a bid to better cope with a
regional financial crisis.
The expansion is expected to give an additional currency supply line for South
Korea, whose won is one of the worst-performing major currencies in the world,
experts say.
With rumors circulating over a possible foreign capital exodus from local bond
and stock markets, the won plunged to a three-month low against the U.S. dollar
on Friday.
The government brushed off the rumor, saying that its current account balance is
improving and it has stockpiles of foreign reserves enough to cope with any
contingency. The nation's foreign reserves stood at $201.74 billion as of the end
of January.
kokobj@yna.co.kr
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