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

(ATTN: CLARIFIES quote in 2nd para, RECTIFIES figure in 4th para; ADDS vice finance
minster's comments in last 2 paras)
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 unless 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$2 billion won-yen currency swap pipeline, which
will expire in April. 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.
In his presentation at a Seoul international forum, Vice Finance Minister Hur
Kyung-wook emphasized the need to expand currency swap lines among Asian
countries.
"Expanded Currency swaps in Asia will help us focus more on stimulating our
economy without having concerns about a foreign currency shortage. Eventually,
that will also be in the interest of advanced countries," Hur said.
kokobj@yna.co.kr
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