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South Korea's financial community heaved a sigh of relief after China agreed to extend a currency swap deal which has been seen as a symbol of economic cooperation between Asia's two major economies.
The deal worth 56 billion US dollars was extended for three years after it expired on Tuesday, said Bank of Korea Governor Lee Ju-yeol and Finance Minister Kim Dong-yeon who were in Washington to attend the meeting of G20 finance ministers and central bank governors and the annual IMF conference.
The extended arrangement took effect on Wednesday, Lee said. It came ahead of China's 19th party congress which will begin on October 18.
"With an agreement to extend the currency swap deal, the government hopes exchanges and cooperation between South Korea and China will be activated soon in other areas," Foreign Ministry spokesman Noh Kyu-duk told reporters.
South Korea has held low-profile negotiations amid lingering concerns about trade retaliation caused by a row over the deployment of a Terminal High Altitude Area Defense (THAAD) system.
South Korean officials hoped an extended swap deal may signal an easing of China's informal trade and economic retaliation that intensified after US troops brought in the system to intercept North Korean ballistic missiles in April. Chinese consumers have shunned South Korean products.
Woo Won-shik, the floor leader of the ruling Democratic Party, has described the swap deal as "a symbol of economic cooperation" between South Korea and China, which have seen a dramatic increase in economic and political ties since they normalized ties in 1992.
China is South Korea's biggest trading partner, and the swap deal, forged in 2009, has served as a safety net for an emergency because South Korean and Chinese central banks can use each other's currency to ride out a financial crisis. Similar arrangements with the United States and Japan have expired.
reporter
Lim Chang-won
cwlim34@ajunews.com
