Japan, South Korea Agree to $15 Billion Currency Swap
Feb. 4 (Bloomberg) -- Japan and South Korea's finance ministers agreed on a $15 billion currency swap accord today that may improve economic and political relations in the region.
Under the agreement, announced today by Japan's Sadakazu Tanigaki and South Korean's Han Duck Soo, the two countries will provide each other with U.S. dollars in the case of a financial crisis, such as the one that tipped Asia into recession in 1997.
Japan will provide as much as $10 billion in exchange for South Korean won, raising the limit from $7 billion, while South Korea will, for the first time, make as $5 billion available in exchange for Japanese yen. The agreement may help mend the two countries' diplomatic relations, the ministers said, which have been strained by Japanese Prime Minister Junichiro Koizumi's repeated visits to a controversial war shrine.
``The fact that we are able to create a cooperative policy network has deep historical meaning,'' said Han, at a press conference in Tokyo. ``We hope this meeting will help the two countries understand each other better and create an atmosphere where we can overcome past problems.''
South Korean President Roh Moo Hyun called off a planned December summit after Koizumi in October visited Tokyo's Yasukuni Shrine, where about 2.5 million Japanese soldiers including 14 Class A war criminals from World War II are enshrined. Koizumi has visited Yasukuni, which means ``Peaceful Nation,'' five times since becoming prime minister in 2001.
``The fact that it's now a two-way agreement is symbolic and a positive step that may lead to further cooperation,'' said Atsushi Nakajima, chief economist at Mizuho Research Institute. ``A currency swap is still just a safety net for countries in the case of crisis, but I'm hopeful that this will lead to more forward-looking policy initiatives about how to get private- sector money flowing in the region.''
South Korea is Japan's third-biggest trading partner. The two countries hosted the World Cup soccer tournament in 2002, the first time ever that more than one country had hosted the quadrennial event.
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Feb. 4 (Bloomberg) -- Japan and South Korea's finance ministers agreed on a $15 billion currency swap accord today that may improve economic and political relations in the region.
Under the agreement, announced today by Japan's Sadakazu Tanigaki and South Korean's Han Duck Soo, the two countries will provide each other with U.S. dollars in the case of a financial crisis, such as the one that tipped Asia into recession in 1997.
Japan will provide as much as $10 billion in exchange for South Korean won, raising the limit from $7 billion, while South Korea will, for the first time, make as $5 billion available in exchange for Japanese yen. The agreement may help mend the two countries' diplomatic relations, the ministers said, which have been strained by Japanese Prime Minister Junichiro Koizumi's repeated visits to a controversial war shrine.
``The fact that we are able to create a cooperative policy network has deep historical meaning,'' said Han, at a press conference in Tokyo. ``We hope this meeting will help the two countries understand each other better and create an atmosphere where we can overcome past problems.''
South Korean President Roh Moo Hyun called off a planned December summit after Koizumi in October visited Tokyo's Yasukuni Shrine, where about 2.5 million Japanese soldiers including 14 Class A war criminals from World War II are enshrined. Koizumi has visited Yasukuni, which means ``Peaceful Nation,'' five times since becoming prime minister in 2001.
``The fact that it's now a two-way agreement is symbolic and a positive step that may lead to further cooperation,'' said Atsushi Nakajima, chief economist at Mizuho Research Institute. ``A currency swap is still just a safety net for countries in the case of crisis, but I'm hopeful that this will lead to more forward-looking policy initiatives about how to get private- sector money flowing in the region.''
South Korea is Japan's third-biggest trading partner. The two countries hosted the World Cup soccer tournament in 2002, the first time ever that more than one country had hosted the quadrennial event.
Go here for the article.