South Korea, Australia Ink US$ 4.5 Billion Currency Swap Agreement

The Bank of Korea and Reserve Bank of Australia struck a bilateral local currency swap agreement on Sunday. The deal, which is effective for three years unless extended through mutual consent, allows the exchange of up to 5 trillion won for 5 billion Australian dollars (US$ 4.5 billion).

“The agreement will ensure that trade between the two countries can continue to be settled in local currency even in times of financial stress,” the central banks said in a joint press release later that day. “The agreement can also be used for other, mutually agreed purposes.”

The central bank governors, Kim Choong-soo and Glenn Stevens, signed the agreement in Sydney while attending the G20 summit. Bilateral trade between the two countries in 2013 totaled around US$ 30 billion, ranking Australia the seventh largest trading partner for South Korea and South Korea as Australia’s fourth largest.

South Korea, trying to dampen the effects of volatile foreign capital flows, has penned similar currency swap accords, weighing in at about US$ 120 billion, with other countries in the past, including a multilateral arrangement for US$ 56 billion with China and US$ 10 billion with Japan. Additionally, South Korea has deals with United Arab Emirates, Indonesia, and Malaysia for US$ 5.4 billion, US$ 10 billion, and US$ 4.7 billion, respectively.

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