Seoul inks currency-swap pact with Tokyo, Beijing

The Bank of Korea and the People's Bank of China said they will increase their bilateral currency swap arrangements to 180 billion yuan ($27.8 billion). The agreement will last for three years and replace a previous arrangement between the two countries to exchange the equivalent of $4 billion U.S. dollars in local currency equivalents. In a separate statement later in the day, the South Korea central bank said it had increased its currency swap arrangements with the Bank of Japan to $20 billion from $3 billion effective until the end of April 2009. "This action will mitigate adverse influence of the global financial turmoil," the Bank of Korea said in a statement Friday. In expanding the swap arrangements, the central banks increase the pool of funds they can draw upon in emergencies to meet short-term liquidity needs. The South Korean central bank also said it had discussed with its Chinese counterpart the possibility of expanding the arrangement to include converting swap currencies into reserve currencies. Separately, leaders of China, Japan and South Korea will hold a joint meeting Saturday to discuss how they can better cushion Asia from the financial maelstrom, according to an AFP report Friday. The meeting, scheduled to last one day, will reportedly take place in the southwestern Japanese province of Fukuoka. The South Korean central bank also said Friday it expects the economy to growth 2% next year, its slowest pace since 1998. South Korea's economy is forecast to grow 3.7% this year.