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Korea, Japan unlikely to discuss currency swap at ministerial meeting

[THE INVESTOR] TOKYO -- South Korea and Japan appeared to be unlikely to discuss restarting a currency swap at the upcoming finance ministers’ meeting, according to Korean government sources.

“The currency swap agreement is not on the agenda for the seventh Korea-Japan finance ministers’ meeting to be held in Seoul on Aug. 27,” said Hwang Kun-il, head of the Ministry of Strategy and Finance’s international policy division, on Aug.25.

The remark followed comments from Japanese Finance Minister Taro Aso, who said on Aug. 24 that Japan is “ready to discuss the currency swap issue” upon Korea’s request. Ministry officials in Japan declined to further comment. 

South Korean Finance Minister Yoo Il-ho
South Korean Finance Minister Yoo Il-ho

The two nations maintained a currency swap agreement for 14 years from 2001 before terminating it in 2014 on dwindling volume.

A currency swap is an arrangement between two countries to exchange one currency for another at a specific rate of exchange to use stronger foreign currencies to ease currency market volatility.

The agreement reached a peak of US$70 billion in October 2012, but took a downturn amid fraying mutual ties. The Japanese government’s continued visits to the Yasukuni shrine and its claims of sovereignty over Korea’s Dokdo islets were some of the thorny issues between the two.

The upcoming finance ministers’ meeting is the seventh since 2006, and marks the second in a row since 2015. It was promised to be an annual event, but due to both economic and political issues, meetings were suspended in 2008, 2010, 2013 and 2014.

From Korea, Finance Minister Yoo Il-ho, who also doubles as the country’s deputy prime minister, will take part to meet with his counterpart Aso, who is expected to bring an entourage of around 35 officials from his ministry.

By Kim Ji-hyun ( / The Investor correspondent
Korea Herald daum