ID :
35228
Fri, 12/12/2008 - 11:55
Auther :
Shortlink :
https://oananews.org//node/35228
The shortlink copeid
Japan set to expand size of currency swap with S. Korea amid crisis
TOKYO, Dec. 11 Kyodo - Japan is set to expand its currency swap deal with South Korea in a move that could provide up to $30 billion worth of funds, more than double the current amount, to Seoul to support the South Korean economy and its currency amid the global financial turmoil, sources close to the matter said Thursday.
The South Korean won has sharply lost its ground against the U.S. dollar and
also hit historic low levels against the yen as foreign investors withdrew
their money from the country's financial markets in the wake of the credit
crisis.
The strengthened swap deal would help offer the necessary fund basis for the
South Korean government to consider accelerating its currency intervention.
The leaders of Japan, South Korea and China will meet Saturday in Japan's
southwestern city of Dazaifu, Fukuoka Prefecture, for a one-day meeting. They
are expected to announce such support measures after the gathering, with China
also likely to join the arrangement by increasing its own swap line with South
Korea.
Under the existing deal, Japan can offer a total of $13 billion worth of funds
in yen as well as in dollars to South Korea in exchange for won. Tokyo is set
to more than double the amount, especially expanding the fund to be provided in
yen, the sources said.
South Korea could underpin the won by selling the dollar and the yen and buying
the South Korean currency. It could also secure necessary won funds at a time
when demands for capital are rising among local companies to cover the
approaching end of the year.
The finance ministers of the three countries had agreed to upgrade their
existing swap deals when they met in Washington last month on the sidelines of
a summit of Group of 20 advanced and emerging economies.
In October, the countries and the 10 members of the Association of Southeast
Asian Nations agreed to strengthen their network of bilateral swap
arrangements, known as the Chiang Mai Initiative, launched in 2000 as part of
their efforts to fend off financial crisis similar to the 1997-98 turmoil in
Asia.
Separately, the Bank of Korea, the central bank of South Korea, concluded a
swap deal with the U.S. Federal Reserve in October, under which the U.S.
central bank can provide $4 billion.
The South Korean won has sharply lost its ground against the U.S. dollar and
also hit historic low levels against the yen as foreign investors withdrew
their money from the country's financial markets in the wake of the credit
crisis.
The strengthened swap deal would help offer the necessary fund basis for the
South Korean government to consider accelerating its currency intervention.
The leaders of Japan, South Korea and China will meet Saturday in Japan's
southwestern city of Dazaifu, Fukuoka Prefecture, for a one-day meeting. They
are expected to announce such support measures after the gathering, with China
also likely to join the arrangement by increasing its own swap line with South
Korea.
Under the existing deal, Japan can offer a total of $13 billion worth of funds
in yen as well as in dollars to South Korea in exchange for won. Tokyo is set
to more than double the amount, especially expanding the fund to be provided in
yen, the sources said.
South Korea could underpin the won by selling the dollar and the yen and buying
the South Korean currency. It could also secure necessary won funds at a time
when demands for capital are rising among local companies to cover the
approaching end of the year.
The finance ministers of the three countries had agreed to upgrade their
existing swap deals when they met in Washington last month on the sidelines of
a summit of Group of 20 advanced and emerging economies.
In October, the countries and the 10 members of the Association of Southeast
Asian Nations agreed to strengthen their network of bilateral swap
arrangements, known as the Chiang Mai Initiative, launched in 2000 as part of
their efforts to fend off financial crisis similar to the 1997-98 turmoil in
Asia.
Separately, the Bank of Korea, the central bank of South Korea, concluded a
swap deal with the U.S. Federal Reserve in October, under which the U.S.
central bank can provide $4 billion.
