South Korea and Japan Extend $10 Billion Currency Swap Through 2029
Seoul and Tokyo agreed to keep their $10 billion dollar-based currency swap in place for three more years, extending a financial safety arrangement through November 2029.
South Korea and Japan agreed Thursday to extend their $10 billion currency swap arrangement for another three years, keeping a bilateral financial safety mechanism in place through November 2029.
South Korean Finance Minister Lee Hyoung-il and Japanese Finance Minister Satsuki Katayama reached the agreement during talks in Bangkok on the sidelines of the 2026 annual meetings of the International Monetary Fund and the World Bank Group. The existing three-year arrangement, signed in December 2023, had been scheduled to expire next month.
The renewed deal retains the current $10 billion size and continues to use the U.S. dollar. A currency swap gives a participating country a way to obtain foreign currency in exchange for its own money if a liquidity shortage emerges. Such arrangements can serve as a financial backstop during periods of severe market stress, when access to dollars or other reserve currencies may tighten.
Officials from both countries said their foreign exchange authorities currently have ample liquidity. They nevertheless described the swap as a symbol of bilateral cooperation, signaling that Seoul and Tokyo see value in preserving the framework even without an immediate funding need.
The decision comes as the two neighboring economies continue efforts to strengthen economic and financial ties. During their meeting, Lee and Katayama discussed ways to expand bilateral exchanges in those areas, according to South Korea’s finance ministry. They also agreed to hold another ministerial meeting in South Korea as soon as possible.
The extension provides continuity for a mechanism restored in late 2023 after years of strained relations. By renewing it before expiration and leaving its terms unchanged, the two governments avoided uncertainty over whether the backstop would lapse. The arrangement will now remain available for three more years as both countries navigate shifts in global interest rates, currency markets and cross-border capital flows.
For South Korea, the agreement adds a bilateral layer to its defenses against potential foreign exchange disruption. For Japan, it reinforces regular financial coordination with a major regional trading partner. The deal does not indicate that either side is facing a current liquidity crisis; rather, it preserves access to a mutually agreed emergency channel should market conditions deteriorate.
The ministers’ plan to meet again in South Korea is expected to provide the next opportunity to broaden cooperation beyond the swap itself. No change to the arrangement’s $10 billion ceiling was announced.