Despite still-unresolved political and economic tensions over an anti-missile system deployment, Seoul and Beijing have agreed to renew their currency swap deal worth 64 trillion won ($56.9 billion) for another three years, Bank of Korea Gov. Lee Ju-yeol and Finance Minister Kim Dong-yeon told reporters in Washington on Friday.
The two finance officials are currently in Washington to attend a meeting of G-20 finance ministers and the annual meeting of the International Monetary Fund and the World Bank.
The announcement of the extended currency swap agreement comes three days after the terms of the deal expired Tuesday, with Korea and China previously failing to agree on a deal extension.
“The Ministry of Strategy and Finance has been closely cooperating with the Bank of Korea,” Kim told reporters. “I am grateful to the Bank of Korea for its efforts to extend the currency swap.”
Currency swap agreements are used a tool for nations to defend against financial turbulence by allowing a country to borrow money from others using its own currency.
The two countries first signed a currency swap deal worth of $26 billion in 2009. The deal later increased in value to $56 billion in 2011 and extended it expiration date by three years.
In the midst of heightened North Korean risk factors and shaky bilateral relations between Seoul and Beijing due to China’s heavy protest regarding Korea’s deployment of the US missile defense system Terminal High Altitude Area Defense, the renewed currency swap agreement appears to be a meaningful symbol of economic cooperation between the two nations.
President Moon Jae-in said last month that a successful Chinese currency swap extension would be “a sign of improving relations.”
A number of local analysts had previously voiced concerns that the diplomatic tension between Seoul and Beijing could jeopardize the currency swap agreement.
Since the beginning of the year, China has conducted series of economic retaliations, including placing a ban on group tours to the country and allegedly boycotting Korean companies operating in China.
Retail giant Lotte recently announced it has decided to withdraw its Lotte Mart discount store chain from the Chinese market amid a plummet in sales. On Friday, Lotte announced that its Lotte Mart’s sales in China sank 64.7 percent in the first eight months to 410 billion won, down from 1.16 trillion won last year.
On Tuesday, it was also announced that Korea’s longest running nonverbal show “Nanta” will be shutting down its Chungjeongno theater due to the lack of Chinese tourists, according to a statement by PMC Production.
By Julie Jackson (email@example.com