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

(ATTN: CORRECTS swap figure in 3rd para; ADDS more remarks 3rd from bottom; TRIMS
throughout)
PHUKET, 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 move in a good direction."
South Korea and Japan have a US$20 billion won-yen currency swap pipeline, which
will expire in April. Seoul also has a 38 trillion won ($25.1 billion) three-year
swap arrangement with China and recently extended a $30 billion swap deal with
the U.S. by six months until October.
Shin made the remarks on the Seoul-Tokyo currency swap in Thailand as he
accompanied Finance Minister Yoon Jeung-hyun for a meeting with his counterparts
from Southeast Asian countries along with Japan and China.
During the gathering held 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 that its stockpile of foreign reserves is enough to cope with any
contingency. The nation's foreign reserves stood at $201.74 billion as of the end
of January.
Attending an international forum in Seoul, Vice Finance Minister Hur Kyung-wook
said that the government will use all necessary means to stabilize the local
currency, including its foreign exchange reserves.
He also emphasized the need to expand currency swap lines among Asian countries
to better cope with an economic crisis.
"Expanded currency swaps in Asia will help us focus more on stimulating our
economy without prompting concerns about a foreign currency shortage. Eventually,
that will also be in the interest of advanced countries," Hur said.
kokobj@yna.co.kr
(END)