South Korea, UAE Sign Currency Swap Deal For Trade Settlements
South Korea and the United Arab Emirates (UAE) signed a won-dirham currency swap deal Sunday as part of their efforts to settle payments for bi-lateral trade with their own currencies instead of the US Dollar.
Central banks of the 2 countries agreed to set up a new swap line with their own currencies worth 5.8-T Won (20-B Dirham or US$5.4-B) to support trade settlement between Seoul and Abu Dhabi, the Bank of Korea (BOK) said in an e- mailed statement Sunday.
The contract will expire in 3 yrs, but it would be extended upon agreement when it matures, the BOK said.
UAE is South Korea’s 5th-largest oil exporter, with Seoul’s Crude Oil imports from the Middle Eastern country taking up 9.3% of the total in Y 2012. Seoul’s overall imports from Abu Dhabi reached US$15.1-B last year, accounting for 2.9% of the total.
The move came just 1 day after South Korea and Indonesia agreed to sign a Won/Rupiah currency swap contract of US$ 10-B.
Under the contract, the 2 countries can exchange 10.7-T Won for 115-T Rupiah within 3 yrs. The swap line can be extended by agreement between the 2 sides.
Seoul and Jakarta said in a joint statement that the currency swap arrangement aimed to promote bi-lateral trade and further strengthen financial cooperation. Indonesia is South Korea’s largest trading partner among the 10-member Association of Southeast Asian Nations (ASEAN), with bi-lateral trade reaching some US$ 30-B in Y 2012.
Emerging economies in Asia, particularly Indonesia, suffered recently from a massive foreign capital exodus and its subsequent currency weakness caused by concerns over the paring of US bond purchases.
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