South Korea and Australia extended their existing currency swap deal by another three years and raised the ceiling in funding for the event of an emergency to 12 billion Australian dollars from previous 10 billion dollars.
The renewed agreement, signed by the two central banks, will allow Korea to exchange Korean wons into Australian dollars and vice versa up to 12 billion Australian dollars or 9.6 trillion won, worth about 8 billion U.S. dollars. The amount is an increase from 10 billion Australian dollars and 9 billion won under the previous pact after the Aussie dollar value has weakened in the last three years, the BOK explained.
The renewed pact will stay effective until Feb. 5, 2023. The existing currency swap deal was due to expire on Friday.
A currency swap agreement enables countries to provide each other with liquidity in times of a crisis.
The two countries initially signed a currency swap agreement in 2014 and have renewed it three times.
“This agreement is designed to promote bilateral trade for the economic development of the two countries, to enhance financial stability and for other, mutually agreed, purposes. The agreement will ensure that trade between the two countries can continue to be settled in local currency even in times of financial stress,” BOK said in a statement.
By Song Min-geun, Kim Hyung-joo, and Cho Jeehyun
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