South Korea Seeks Unlimited Currency Swap with US Amid Stalled Trade Negotiations
South Korea has proposed establishing an “unlimited” currency swap arrangement with the United States as part of ongoing trade negotiations, according to a report by Yonhap News Agency on Monday. The proposal comes amid limited prospects for a breakthrough in talks following a framework deal struck in late July.
Under the earlier agreement, Seoul pledged to invest $350 billion in the United States in exchange for Washington lowering tariffs on South Korean exports from 25% to 15%. Most of the investment is expected to take the form of loans and credit guarantees, but the US is pressing for a larger portion to be made in direct cash. South Korean officials have voiced concerns that such a requirement could lead to a significant dollar outflow, putting upward pressure on the won-dollar exchange rate. As of late August, the country’s foreign reserves stood at $416.3 billion.
While negotiations continue, presidential spokesperson Kang Yu-jung stated on Sunday that “it is difficult to say anything definitive about each side’s position.” Trade Minister Yeo Han-koo is set to travel to Washington on Monday to pursue further talks, just a day after Industry Minister Kim Jung-kwan returned from separate discussions with US Commerce Secretary Howard Lutnick. The two countries have previously signed swap deals only twice—during the 2008 global financial crisis and the 2020 COVID-19 pandemic.
