Central bank signs currency swap agreement with Turkey

Bank of Korea's headquarters in central Seoul [YONHAP]

Bank of Korea and the Central Bank of the Republic of Turkey signed a 2.3-trillion-won ($2 billion) currency swap deal on Thursday.

The deal will last three years.

Currency swap agreement is a tool to provide liquidity for the counterparty in case of financial turmoil. The exchange will be between local currencies -- 2.3 trillion won and 17.5 billion Turkish lira.

According to the central bank, the deal has been inked to bolster financial cooperation and expand trade between the two countries.

Turkey is a major trade partner for Korea. A free trade agreement between the two countries has been effective since May 2013. Last year, trade between the two countries amounted to $6.86 billion.

Korea has signed currency swap deals with nine countries, including the United States, Canada, Switzerland, China, Australia, Malaysia, Indonesia and the United Arab Emirates. The deals add up to over $198.2 billion.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]