South Korea is in discussions with the United States to establish a bilateral foreign exchange (FX) swap line as part of broader trade negotiations, according to Finance Minister Koo Yun-cheol. The initiative aims to ensure financial stability and address concerns about how upcoming U.S. investments could influence South Korea’s currency market.
Speaking at a parliamentary session on Monday, Minister Koo explained that Seoul is exploring multiple options, including a conditional or limited swap line, to safeguard liquidity without depleting foreign reserves. He estimated that South Korea could directly invest around $20 billion in the U.S. annually without straining central bank holdings, compared to the $350 billion figure outlined in the preliminary agreement reached in July.
Koo clarified that the $350 billion commitment primarily includes loans and guarantees rather than direct capital transfers, due to potential currency market effects. He added that Washington now appears to understand Seoul’s position “to some degree.”
Foreign Minister Cho Hyun also stated that there have been “positive signals” from the U.S. regarding the discussions. Additionally, South Korea’s presidential office confirmed that the U.S. has responded to a revised proposal submitted last month, which included the FX swap request.
The two nations aim to finalize the trade agreement by late October during the Asia-Pacific summit in Gyeongju, South Korea, where several high-level meetings between global leaders are scheduled to take place.
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