China, S. Korea currency swap deal to improve trade settlement
2012-12-04 14:31:37
South Korea on Tuesday said it agreed with China to use proceeds of an existing currency swap deal to settle bilateral trade between two countries.
According to the scheme, the Bank of Korea will lend its renminbi currency swap proceeds to banks in Korea, thereby supporting Korean firms' renminbi payments for settlement of their trade with China.
Likewise, China's central bank will lend its Korean won currency swap proceeds to banks in China to settle Chinese firms' payments. A KRW 64 trillion swap line will be made available for trade settlement.
A joint statement from the Bank of Korea and the Ministry of Strategy and Finance said this new facility is expected to alleviate the sluggishness of settlement in the KRW or CNY even despite the rapid increase in trade between Korea and China.