South Korea sees the currency swap contract with Japan as a matter of "financial cooperation" between the two countries, a high-ranking government official said Tuesday.

The remarks come in response to a Japanese media report that Tokyo would not extend the soon-to-be-expired US$3 billion currency swap contract unless Seoul asks for its extension. It is to expire on July 3.

"The amount is not that significant given our current financial market situation. I think that it is a matter of bilateral financial cooperation, not something that has an impact on our market," the finance ministry official told Yonhap on the customary condition of anonymity.

South Korea and Japan signed $13 billion worth of a current swap deal in 2008 to better prepare for the global financial crisis. They expanded the swap line temporarily to $70 billion in 2011. Under the deal, Seoul can exchange its own currency with safer assets such as the dollar and the yen.

The amount, however, returned to $13 billion last August as both countries did not extend the temporary contract. The decision was made amid heightened tensions between the neighboring countries over South Korea's easternmost islets of Dokdo.

At the time, Japan said that the decision was made because Seoul did not ask for it.

The official said that the government has yet to decide whether to request the extension for the maturing $3 billion, adding that both countries are currently in talks over how to deal with the issue. Other sources said that the final decision will likely be made by the end of this month. (Yonhap News)