Japan and South Korea have agreed to revive a $10 billion currency swap agreement.
The currency exchange agreement aims to improve two-way relations and strengthen a regional financial safety net in the face of rising geopolitical concerns.
According to the report, the swap agreement was first agreed upon in 2001 as a tool to assist the two countries in combating a financial crisis, but it was never used and was allowed to expire in 2015 due to diplomatic tensions.
Masato Kanda, Japan’s vice finance minister for foreign affairs, stated that there is “an increased need to strengthen bilateral ties as global and regional economies face significant uncertainty and risks.”
The currency swap deal was part of the two countries’ ambition to promote co-operation, he added.
The restored agreement was reached at a meeting in Tokyo between South Korean Finance Minister Choo Kyung-ho and Japanese Finance Minister Shunichi Suzuki, marking the first communication between the two finance ministers in seven years.
Meanwhile, the swap line is not intended for any immediate use, but is meant to solidify financial co-operation networks, Choo told reporters.
According to South Korea’s presidential office, the agreement symbolizes improved relations and is likely to have a favorable impact on financial and foreign exchange markets.
The ministers also reviewed the global economy, infrastructure investment, developing-country debt difficulties, and broader financial cooperation.
In 2024, Seoul will host the next round of financing discussions.
