FX.co ★ Seoul, Washington Discuss FX Swap Amid Trade Deal

South Korea is currently negotiating with the United States to set up a bilateral foreign exchange swap line as part of a more comprehensive trade agreement. This move comes amid worries that U.S. investments might inadvertently disrupt the South Korean currency market. On Monday, Finance Minister Koo Yun-cheol addressed parliament, indicating that Seoul is considering a conditional swap line. He projected that South Korea could invest up to $20 billion annually in the U.S. without depleting its central bank reserves, a figure significantly lower than the $350 billion outlined in the preliminary agreement reached in July. South Korea asserts that most of this amount would comprise loans and guarantees rather than direct investments, primarily due to foreign exchange risks. While President Trump had previously suggested that Seoul would make an "upfront" payment, Koo mentioned that Washington now moderately comprehends South Korea's concerns. The presidential office acknowledged receipt of a response to Seoul's revised proposal, which includes the request for a swap line. This agreement is anticipated to be finalized at the upcoming Asia-Pacific summit in Gyeongju later this month.