South Korea and Japan extend $10 billion currency swap to 2029

South Korea and Japan have agreed to extend their $10 billion currency swap agreement for an additional three years, pushing the expiration date from November 2026 to November 2029.

South Korean Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il met with Japanese Finance Minister Katayama Satsuki in Bangkok, Thailand, during the G20 and IMF/World Bank annual meetings. While both nations acknowledged that their respective foreign exchange authorities currently maintain sufficient liquidity, they decided to extend the agreement to symbolize and maintain financial cooperation and coordination between the two countries.

The current swap operates on a dollar-based structure: South Korea provides won to borrow dollars from Japan, while Japan provides yen to borrow dollars from South Korea. This mechanism is intended to serve as a practical safety net for foreign currency liquidity.

Additionally, the finance ministers reaffirmed agreements made during their March meeting in Tokyo and agreed to hold the next bilateral finance ministers' meeting in South Korea in the near future.