Canada and South Korea Sign First Currency Swap Deal

Bok Gov Lee Ju Yeol and Boc Gov Stephen Poloz Signing CeremonyOn November 15, 2017, the officials of South Korea and Canada met to sign on a bilateral currency swapping deal. The deal would provide South Korea with a strong safety net from a probable financial crisis and crash in the coming period.

After several months of talking and negotiations between the two countries, the signing ceremony took place at Ottawa and was completed by Lee Ju-Yeol and Stephen S. Poloz who are the Governors of Bank of Korea and Bank of Canada respectively.

This is the first ever currency swap arrangement that has been made by South Korea without any expiry date or any ceiling limit on liquidity provisions.

The Bank of Korea is in complete agreement with Bank of Canada, and it will help increase the current safety nets established by both these banking institutions with several nations. The deal is valid immediately, and Bank of Canada would provide Canadian Dollars to South Korea’s financial institution and vice versa.

ARIRANG NEWS

Kim Dong Yeon who is the Finance Minister of South Korea made the following statement:

It is meaningful we have acquired the strongest ever safety net that can be used in various possible crises. The deal could help improve South Korea’s overseas credibility and further deepen economic and financial cooperation between the two countries.

South Korea is regarded as the four largest economies in Asia next only to India, China and Japan. It is also the 9th trade partner of Canada and supplies important export items like electronic items, cars and steel products. Canada holds 21st rank regarding South Korea’s trade partner exporting meats and minerals into the nation. The trade between both these countries became all the more meaningful after the Canada South Korea Free Trade Agreement in the year 2014.

After the currency swap deal, Canada has decided to remove 98% of tariff lines of goods exported and imported between both these nations. This is the first time Canada is making such kind of exception with an Asian company. As per Lee, the swap deal is regarded as one of the most important transactions for Canada since 2008. At the moment, Canadian Dollars is one of the six reserve currencies of South Korea.

After the global financial crisis of 2008-09, South Korea has started creating currency deals with several countries both inside and outside Asia. Some of the deals are made with Australia, China and the United States. Last month, it renewed a currency swap deal of US$ 56 billion with Chine for three years in spite of unofficial restriction of Beijing in trade and tourism. Canada has also made currency swap deals with six other nations including the United States and China. 

Steven Rudford

Steven Rudford

Hello, my name is Steven Rudford. Welcome to Top10FX.net. Follow my website for the most trustworthy Forex broker reviews and last minute financial trading news.


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