SEOUL (Reuters) -South Korea is discussing with the U.S. various ways to set up a bilateral foreign exchange swap line as part of a trade deal over concerns about how proposed U.S. investments could skew the local currency market, the country’s finance minister said.
Minister Koo Yun-cheol made the comment at a parliamentary session on Monday as he answered a lawmaker’s question about the need to request a conditional swap line, if not an unlimited one.
Koo put the maximum amount of direct investment South Korea would be able to make in the U.S. each year at around $20 billion, without depleting central bank reserves, compared with $350 billion agreed in the initial deal reached in July.
South Korea’s stance has been that the $350 billion would mostly comprise loans and guarantees, with limited direct investment, given the foreign exchange implications, while U.S. President Donald Trump had said South Korea would pay “upfront”.
Koo said at the hearing he believed Washington now understood South Korea’s concerns “to some degree”.
Foreign Minister Cho Hyun, in a different session held on Monday, said there had been “some positive signals” from the United States.
South Korea’s presidential office also said in a separate notice there was some response from the U.S. on a revised proposal made by Seoul last month, without elaborating. The proposal included a request for a currency swap line, Presidential Secretary Kim Yong-beom said earlier this month.
Seoul aims to formalise its trade deal with the U.S. by late October when it holds an Asia-Pacific summit in Gyeongju, South Korea, where Trump is expected to meet Chinese President Xi Jinping.
(Reporting by Jihoon LeeEditing by Ed Davies)
