South Korea seeks unlimited currency swap with US

South Korea has asked the United States for an unlimited currency swap arrangement to cushion potential shocks in the foreign exchange market as the two countries continue trade talks, the government said Monday.

The Ministry of Economy and Finance confirmed that discussions are underway on a range of measures to stabilize markets but declined to disclose details.

A currency swap allows two central banks to exchange currencies at a fixed rate and later reverse the transaction, providing liquidity in times of financial stress.

If approved, the Bank of Korea could borrow dollars directly from the Federal Reserve — a step previously taken during the 2008 global financial crisis and again at the height of the COVID-19 pandemic.

The request underscores Seoul’s growing concerns over volatility as it works to meet U.S. investment demands amounting to $350 billion. That figure represents more than 83 percent of South Korea’s foreign exchange reserves, which stand at about $416.3 billion.