JAKARTA - South Korea proposed the establishment of a bilateral currency exchange mechanism with the United States in trade talks between the two countries.
South Korea submitted an "infinite"currencyswap proposal with the US to strengthen its resilience to currency turmoil, following further negotiations between the two countries regarding the tariff agreement that had been stuck since late July.
Reported by ANTARA from Yonhap-OANA, Monday, September 15, in an agreement that had been reached, South Korea promised to invest US$350 billion (nearly Rp5,745 trillion) in exchange for a decrease in lead rate from 25 percent to 15 percent.
However, according to South Korean officials, the US requested that most of the investment be made in cash, sparking fears of a sharp spike in won's exchange rate against the dollar due to massive dollar outflows.
Until the end of last month, South Korean foreign exchange reserves were recorded at 416.3 billion dollars or around Rp. 6,670 trillion.
The two countries are still negotiating so that it is "it is difficult to convey the exact position of each party," South Korean presidential spokesman Kang Yu-jung said at Sunday's press conference.
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The South Korean Ministry of Finance said various steps were being discussed to minimize the impact of tariff agreements on foreign exchange markets.
The two previous countries only signed acurrency swap agreement twice during the 2008 global financial crisis and the COVID-19 pandemic in 2020.
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