TOKYO – Japan and South Korea agreed to revive a currency swap agreement for times of crisis, in the latest sign of warming ties as the countries work to smooth over historical antagonisms.
Japanese Finance Minister Shunichi Suzuki announced the agreement after meeting with his South Korean counterpart, Choo Kyungho.
It was the first time the two countries have held annual financial talks in seven years, though Suzuki and Choo also met in South Korea in May.
Suzuki told reporters that the 3-year currency swap agreement would help reinforce trust in the financial stability of the two countries as a fallback in an emergency.
But he emphasized that Japan is fully prepared to deal with fluctuations in the Japanese yen, which has weakened sharply against the US dollar in the past year.
The $10 billion swap arrangement expired in 2015 and had not been renewed. Largely symbolic, it allows the South Korean and Japanese central banks to exchange currencies for each country’s reserves of US dollars to provide extra liquidity, or cash supplies, in case of a crisis.
The two major Asian economies, both US allies, have recently mended ties as they contend with challenges posed by China and North Korea, despite tensions over issues left over from Japan´s 35-year occupation of the Korean Peninsula before and during World War II.
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