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S. Korea, China raise won-yuan swap deal

(Shanghai Daily)

08:29, October 27, 2011

Chinese Vice Premier Li Keqiang (left) shakes hands with South Korean President Lee Myung-bak during their meeting at the presidential house in Seoul yesterday. Li is on a twoday official visit focusing on efforts to revive the stalled six-nation talks on North Korea's nuclear program and expansion of the bilateral currency swap deal. The central banks of the two countries signed an agreement in Seoul yesterday to double their yuan-won swap line from 180 billion yuan to 360 billion yuan for the next three years.(Xinhua Photo)

China's central bank says it has agreed with its South Korean counterpart to expand their currency swap deal as a backstop against global economic turmoil.

The People's Bank of China signed the agreement with the Bank of Korea in Seoul yesterday, doubling its yuan-won swap line from 180 billion yuan to 360 billion yuan for the next three years.

The announcement came as Chinese Vice Premier Le Keqiang met with South Korea's President Lee Myung-bak during a two-day trip to Seoul.

Swaps allow one central bank to borrow a currency from another, offering an equivalent amount of its own as collateral.

The agreement, together with a similar deal signed with Japan on October 19, offers South Korea protection from funding shocks as Europe's sovereign-debt crisis deepens and demand in South Korea's largest export markets slows. The won has weakened 7.1 percent against the dollar over the past three months, the second-worst performer in Asia.

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