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S.Korea will not discuss currency swap during Biden visit - official

·1 min read

SEOUL, May 18 (Reuters) - Forming a currency swap agreement with the United States is unlikely to be discussed during President Joe Biden's visit this week as a way of countering the won's persistent decline, a senior South Korean official said on Wednesday.

Deputy National Security Advisor Kim Tae-hyo said in response to a question from reporters that it was not a proper time to discuss that as a currency swap is usually discussed during a serious economic crisis.

"The Federal Reserve usually considers currency swap agreements at a time of serious economic crisis, but it's not that time now and our economic fundamentals are strong," Kim told reporters while explaining about Biden's planned visit.

Biden is expected to arrive in South Korea on Friday and hold talks with South Korean President Yoon Suk-yeol.

There has been some speculation that South Korea may have to seek to form a currency swap agreement with the Federal Reserve to support the won, which has weakened some 6% so far this year against the dollar on top of last year's 8.6% fall.

The South Korean central bank formed a $60 billion currency swap agreement with the U.S. Federal Reserve in March 2020 as an emergency step to stabilise markets, and both sides let the agreement expire at the end of last year.

Under a bilateral currency swap, South Korea would be able to borrow a certain amount of U.S. dollars for a pre-set period and at a pre-set rate in exchange for won at times of trouble in dollar liquidity.

(Reporting by Hyonhee Shin; Writing by Choonsik Yoo; Editing by Christian Schmollinger)