South Korea and China's 56-billion U.S. dollar currency swap deal is here to stay.
After a few days of 'will they or won't they' following the agreement's expiration earlier this week, Bank of Korea Governor Lee Ju-yeol and Finance Minister Kim Dong-yeon confirmed the extension of the deal.
The agreement allows Seoul and Beijing to use their currency to buy U.S. dollars from one another at a pre-determined rate, in cases of financial crisis.
The deal was initially signed back in 2009 for a 26 billion dollar currency swap, and expanded to the current 56 billion in 2011.
While the latest renewal secures the deal for another 3 years and is expected to benefit both sides economically, pundits are rather skeptical about whether it will help ease the tensions between the two countries over Korea's decision to install the THAAD anti-missile system.
"Beijing has repeatedly denied imposing any official measures against Seoul over the THAAD deployment. And this currency swap between the two is a government-level agreement, so if China had refused to extend the deal, it would've been interpreted as an official retaliatory act from China. So the deal's renewal was expected as Beijing doesn't have valid reasons not to sign an extension, but it doesn't mean tensions over THAAD have softened."
Which means unofficial sanctions from Beijing towards Seoul over THAAD could continue for the time being despite the successful renewal of the swap deal.
Industry sources estimate Korean companies suffered billions of dollars of losses from such measures.
Beijing claims the missile defense system undermines its security interests, while Seoul and Washington insist the system is for defense purposes to counter North Korean threats.
Lee Unshin Arirang News.