South Korea has asked the United States to establish a bilateral currency swap arrangement.
The finance ministry revealed the information on Sunday in a press notice, saying that various measures are being discussed to minimize the impact on South Korea’s foreign exchange market during negotiations on the country’s investment plan for the United States.
The ministry, however, declined to provide details, saying that it could not comment on the specifics of ongoing discussions with the U.S.
A currency swap is an agreement that allows one country to deposit its own currency with another and borrow the counterpart’s currency at a pre-determined exchange rate in times of need.
Seoul’s request is seen as a move to preempt potential turmoil in the foreign exchange market as direct investment demanded by the U.S. without a swap deal could sharply weaken the Korean won.
