SEOUL–South Korea and Malaysia on Sunday signed a currency swap agreement worth US$4.7 billion, Seoul’s central bank said, in a move to encourage bilateral trade and help curb currency swings. The latest agreement allows the two Asian nations to purchase and repurchase each other’s currency of up to 5 trillion won (US$4.7 billion), or 15 billion ringgit, the central Bank of Korea said in a statement. The deal — valid for three years and renewable upon agreement — will allow greater flexibility for businesses to use local currencies for trades that have been commonly settled in U.S. dollars, the two countries’ central banks said in a joint statement. The latest agreement is the third currency swap deal South Korea has signed this month in a move to guard against financial turmoil and encourage trade with other emerging markets.
Asia’s fourth-largest economy earlier this month struck currency swap deals worth US$10 billion and US$5.4 billion with Indonesia and the United Arab Emirates, respectively.