August 16, 2022

South Korea and the United States have agreed on a large-scale currency swap that the Korean monetary authorities will help stabilize the domestic foreign exchange market amid the COVID-19 outbreak.

On March 19th, the Bank of Korea announced that the swap would be worth US$60 billion under the Federal Reserve and will continue for at least six months or until September 19th.

This agreement is expected to help stabilize the Korean dollar market. The United States has similar deals with Denmark, Norway, Sweden, Australia, New Zealand, Brazil, Mexico and Singapore.

The agreement will enable Seoul and Washington to convert the won to USD to provide liquidity for both countries. The deal, for the second time since 2008, has agreed to swap $30 billion to protect the Korean market from the effects of the US subprime crisis.