Korea and Turkey renew $2 billion currency swap deal

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Korea and Turkey renew $2 billion currency swap deal

Published: 12 Aug. 2024, 17:40 Updated: 12 Aug. 2024, 17:51

SHIN HA-NEE
shin.hanee@joongang.co.kr

Turkish lira banknotes [REUTERS/YONHAP]

Korea and Turkey renewed a $2 billion currency swap deal Monday.

The bilateral swap agreement, which Bank of Korea and the Central Bank of the Republic of Türkiye signed in their respective currencies — Korean won and Turkish lira — will last for three years, according to the Bank of Korea and the Ministry of Economy and Finance.

The bilateral currency swap was first introduced in August, 2021. It is intended to “promote bilateral trade and bolster financial cooperation between the two countries,” the Finance Ministry said in a release.

The arrangement allows for the exchange of up to 2.3 trillion won and 56 billion liras, the equivalent of around $2 billion. While the won’s exchange cap remains unchanged from the initial agreement signed in 2021, the lira’s cap has more than tripled due to the Turkish currency's recent drastic depreciation.

The lira-dollar exchange rate, which hovered at around 8.5 lira per dollar in August 2021, spiked to about 33.5 liras recently as Turkey struggles with steep inflation.

Korea has nine active currency swap deals effective as of now, including a $10 billion swap line with Japan revived last December and an agreement with Canada with no ceiling on maturity or amount.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]