Korea, Malaysia currency swap comes into effect

Starting next month, Korean and Malaysian companies will be able to tap into the legal tender of each country because of a currency swap deal they made late last year.

The Bank of Korea and the Ministry of Strategy and Finance said yesterday that it is now allowing companies from both countries to access the 5 trillion won, or 15 billion ringgit, currency swap for trade payments.

The two nations signed the deal in October.

Under the agreement, the Korean central bank will lend Malaysian ringgits to domestic banks. The same system will be applied to the Korean won. Liquidity support by the central bank will not only boost the use of each nation’s currency in trade but will also have the effect of expanding a practical safety net in times of financial crisis, the central bank said in a statement.