ID :
213126
Fri, 10/28/2011 - 06:20
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https://oananews.org//node/213126
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S. Korea-China currency swap to bring 2 economies closer
By Kim Young-gyo
HONG KONG (Yonhap) - The recent agreement between South Korea and China to expand their currency swap line will bring the two Asian economies closer, creating a more stable economic environment, Chinese experts said Friday.
The central Bank of Korea (BOK) and the People's Bank of China agreed Wednesday to expand the existing won-yuan swap to 360 billion yuan (US$56 billion) from 180 billion yuan. The swap arrangement will be effective for three years, which could be also extended by agreement.
Wang Yuzu, an associate research fellow at the Chinese Academy of Social Sciences, said the move will clearly benefit economic and trade activities between the two countries.
"Expanding the currency swap model is aimed at maintaining stability of the structure for bilateral trade and investment. It will help establish a more predictable international economic environment," Wang said.
Increasing the amount of yuan in its foreign exchange reserve is part of South Korea's efforts to diversify its foreign exchange risks amid global economic uncertainties, he said.
Liu Xu, an analyst at Beijing Capital Futures Co., said it will allow more South Korean exporters to trade settlements in the Chinese currency.
"For South Korea, the swap agreement will help lock the risk of possible fluctuations of the yuan in the future," Liu said.
He added that, from the Chinese point of view, the move will further strengthen the position of the yuan in the regional trade.
Wang expressed a similar view. "If the yuan keeps appreciating at the current speed, it could result in losses for the South Korean exporters who have to settle their trade in the yuan. The swap deal will help reduce such risks."
China, which overtook Japan as the world's No. 2 economy this year, has been seeking to reduce its reliance on the U.S. dollar and promote the yuan as a global currency.
Beijing first introduced a scheme to make the yuan a global settlement currency in July 2009, when it started to allow companies in Hong Kong, Shanghai and four cities in the southern province of Guangdong to settle their trade transactions with foreign companies with the yuan.
In June last year, the Chinese central bank lifted geographic restrictions on yuan settlements.
HONG KONG (Yonhap) - The recent agreement between South Korea and China to expand their currency swap line will bring the two Asian economies closer, creating a more stable economic environment, Chinese experts said Friday.
The central Bank of Korea (BOK) and the People's Bank of China agreed Wednesday to expand the existing won-yuan swap to 360 billion yuan (US$56 billion) from 180 billion yuan. The swap arrangement will be effective for three years, which could be also extended by agreement.
Wang Yuzu, an associate research fellow at the Chinese Academy of Social Sciences, said the move will clearly benefit economic and trade activities between the two countries.
"Expanding the currency swap model is aimed at maintaining stability of the structure for bilateral trade and investment. It will help establish a more predictable international economic environment," Wang said.
Increasing the amount of yuan in its foreign exchange reserve is part of South Korea's efforts to diversify its foreign exchange risks amid global economic uncertainties, he said.
Liu Xu, an analyst at Beijing Capital Futures Co., said it will allow more South Korean exporters to trade settlements in the Chinese currency.
"For South Korea, the swap agreement will help lock the risk of possible fluctuations of the yuan in the future," Liu said.
He added that, from the Chinese point of view, the move will further strengthen the position of the yuan in the regional trade.
Wang expressed a similar view. "If the yuan keeps appreciating at the current speed, it could result in losses for the South Korean exporters who have to settle their trade in the yuan. The swap deal will help reduce such risks."
China, which overtook Japan as the world's No. 2 economy this year, has been seeking to reduce its reliance on the U.S. dollar and promote the yuan as a global currency.
Beijing first introduced a scheme to make the yuan a global settlement currency in July 2009, when it started to allow companies in Hong Kong, Shanghai and four cities in the southern province of Guangdong to settle their trade transactions with foreign companies with the yuan.
In June last year, the Chinese central bank lifted geographic restrictions on yuan settlements.
