Korea has signed a US$10 billion currency swap deal with Indonesia. Currency swaps can be used to stabilize economies in a financial crisis, with the country facing economic woes borrowing from the treasuries of the other government using its own currency as collateral.
Deputy Prime Minister for Economic Affairs Hyun Oh-seok and Bank of Korea Chairman Kim Choong-soo reached the agreement in a meeting with their Indonesian counterparts in Washington on Saturday.
The deal involves the currencies of the respective countries rather than U.S. dollars and provides for W10.7 trillion (US$1=W1,072) being swapped with 115 trillion rupiahs. It is effective for three years and can be extended.
Experts say the deal demonstrates the rising prowess of the won. "The latest swap deal involves won rather than dollars and was reached at the request of Indonesia, which recently saw the value of its currency plummet," said a member of a state-run think tank.