South Korea and the United Arab Emirates on Sunday clinched a won-dirham currency swap deal worth US$5.4 billion as part of efforts to strengthen financial cooperation among the two nations, the Korean central bank said.
Under the three-year currency swap facility, the two countries can exchange 5.8 trillion won for 20 billion dirham or vice versa, which could be also used to settle payments linked to their bilateral trade, the Bank of Korea (BOK) said in a statement.
The BOK said that the deal is subject to renew upon agreement when a maturity comes.
The BOK said that it and its counterpart in the United Arab Emirates will continue to make efforts to facilitate the two countries' trade and strengthen financial cooperation.
The UAE is South Korea's third-largest trade partner among countries in the Middle East. The value of Korea's import from the UAE reached $15.1 billion last year, while Seoul's exports were valued at $6.9 billion, according to the customs office.
The move came as Korea and Indonesia agreed to sign a won-rupiah currency swap deal worth $10 billion amid market turmoil facing emerging countries, such as India and Indonesia.
Korean Finance Minister Hyun Oh-seok said on Saturday in a meeting with reporters in Washington that Korea is in talks with a few more countries for currency swap deals.
Hyun did not mention the names of the countries, but said they include those with which Korea has a large amount of trade, including imports of natural resources.
A currency swap line is a tool to defend against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.
The Korean government has been seeking to utilize currency swap deals with other countries to settle payments for trade in a bid to reduce its dependency on the U.S. dollar.