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(LEAD) S. Korea, Switzerland agree on currency swap deal

2018/02/09 16:54

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(ATTN: ADDS more details in paras 3-5)

SEOUL, Feb. 9 (Yonhap) -- South Korea and Switzerland have clinched a standing bilateral currency swap deal that will help expand financial exchanges between the two countries, Seoul's central bank said Friday.

The Bank of Korea (BOK) said its governor Lee Ju-yeol and the chairman of the Swiss National Bank (SNB) governing board, Thomas Jordan, will sign the agreement in Zurich on Feb. 20.

The three-year swap agreement enables Korean won and Swiss francs to be purchased and repurchased between the two central banks up to a limit of 11.2 trillion won (US$10.6 billion), or 10 billion Swiss francs.

The currency swap deal can be renewed through bilateral agreement, according to the central bank.

The BOK and the SNB have enjoyed a constructive exchange of views for many years. This bilateral swap arrangement will further strengthen collaboration between the two institutions, the central bank here said.

A currency swap is a tool for defending against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.

Market watchers said the agreement will add to South Korea's financial stability, as Swiss is one of the most credible countries around the globe.

In November of last year, South Korea sealed a similar deal with Canada after agreeing to extend a currency swap deal with Beijing.