South Korea proposes 'unlimited' currency swap with US

ANKARA

South Korea has proposed establishing an "unlimited" currency swap with the US amid very little hope for a breakthrough in ongoing trade talks between the two countries, a local media report said Monday.

The country made the proposal in recent talks to defend its currency in follow-up negotiations on a tariff deal struck between the two countries in late July, Yonhap News Agency reported.

Under the framework deal, South Korea pledged to invest $350 billion in the US in exchange for Washington slashing its reciprocal tariffs on South Korea from 25% to 15%.

Most of the planned investment will be in the form of loans and credit guarantees, but Washington is demanding that a greater share of the investment be made in direct cash.

South Korea has raised concerns that a massive dollar outflow could trigger a sharp rise in the won-dollar exchange rate.

As of the end of last month, South Korea's foreign reserves stood at $416.3 billion.

South Korea and the US "are still negotiating the terms, and so it is difficult to say anything definitive about each side's position," presidential spokesperson Kang Yu-jung said Sunday.

In a related move, South Korean Trade Minister Yeo Han-koo is departing for the US on Monday to hold follow-up negotiations on the trade deal.

The visit comes just a day after Industry Minister Kim Jung-kwan returned to Seoul after holding separate trade talks with US Commerce Secretary Howard Lutnick in Washington.

The two countries have previously signed swap arrangements only twice, during the 2008 global financial crisis and the 2020 COVID-19 pandemic.