The Bank of Korea announced on March 19 that it agreed on a USD 60 billion currency swap with the U.S. Federal Reserve System to remain in effect for at least six months. (Yonhap News)

By Lee Kyoung Mi and Lee Hana

Korea and the U.S. have agreed to a massive currency swap that Korean monetary authorities say will help stabilize the domestic foreign exchange market reeling from the COVID-19 outbreak.

The Bank of Korea on March 19 said the swap is worth USD 60 billion with the U.S. Federal Reserve System and will be in place for at least the next six months, or until Sept. 19.

The agreement is expected to help stabilize the dollar market in Korea. The U.S. has similar deals with Denmark, Norway, Sweden, Australia, New Zealand, Brazil, Mexico and Singapore.

The arrangement will allow Seoul and Washington to provide bilateral liquidity by swapping KRW for USD. The deal is the second of its kind since 2008, when both countries agreed to swap USD 30 billion to protect the Korean market from the effects of the U.S. subprime crisis.

The central bank said it would stabilize the domestic USD market as soon as the currency swap came through, adding that it hopes the arrangement will help protect the domestic market from soaring dollar demand due to the pandemic.

km137426@korea.kr