S. KOREA-U.S. AGREE TO EXTEND CURRENCY SWAP DEAL

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South Korea and the United States have agreed to extend the currency swap deal by six more months, until March 2021. The extension of the currency swap deal is expected to help stabilize the foreign currency market where uncertainty caused by the pandemic still remains.

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​The currency swap deal between South Korea and the United States amounting to 60 billion dollars has been extended through March 2021. The Bank of Korea and the U.S. Federal Reserve Board agreed to extend the currency swap deal by six months through March 31 of 2021 instead of the initial deadline of September 30 of 2020. The Bank of Korea says although the domestic foreign exchange market seems to be stabilizing lately, the uncertainty stemming from the pandemic still remains. The extension of the agreement is expected to help maintain stability in Korea's foreign exchange and financial markets. The government says the decision to extend the deal just two months prior to its expiration will have a profound effect in making the market more predictable and stable. When the Korea-U.S. currency swap deal was first signed on March 19, around the time when the impact of the COVID-19 pandemic became palpable in the domestic financial market, the won-to-dollar exchange rate fell nearly 40 won the following day after days of a sharp increase, while KOSPI surged 7.4 percent, the highest increase in 11 years and three months. After the extension of the deal, the Bank of Korea plans to fund currency swaps with foreign currency loans provided through competitive bidding if necessary. The BOK supplied a combined of 19.9 billion dollars through foreign currency loans six times between March and May this year. As a result, the nation's foreign currency market stabilized quickly with the foreign currency liquidity market improving and the exchange rate fluctuations decreasing.