S. Korea extends currency swap line with Japan

SEOUL, Oct. 16 (Yonhap) -- South Korea has agreed to extend its currency swap
facility with Japan by an additional three months in an effort to help stabilize
the local financial market, the Bank of Korea (BOK) said Friday.
In mid-December, the BOK agreed with the Bank of Japan to expand its existing
won-yen swap facility to $20 billion from $3 billion. In late March, the two
central banks agreed to extend the swap line by six months until Oct. 30.
The BOK said that with the latest agreement, the swap facility will be extended
until Feb. 1, 2010. South Korea also has a won-dollar swap arrangement of $10
billion with Japan which can be tapped in the event of an emergency.
"The BOK believes that this action will continue to contribute to securing
stability in regional financial markets as there remain significant uncertainties
regarding the global economy and financial market although the global economy has
been recovering recently," the central bank said in a statement.
The move comes about four months after the U.S. Federal Reserve extended its
currency swap line of US$30 billion with the BOK until Feb. 1.
The Korean currency has been stabilizing quickly as the country's current account
has remained in the black and foreign investors have snapped up Seoul stocks. The
Korean unit has gained about 36 percent versus the dollar since March, when
global financial turmoil began to ease.
South Korea's foreign reserves, the world's sixth-largest, totaled $254.25
billion as of the end of September.
Last year the reserves declined for eighth straight months before rebounding in
December, as foreign exchange authorities tapped part of their dollar holdings to
stem the won's sharp fall and ease the credit crunch.
sooyeon@yna.co.kr
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