South Korea, China agree to boost yuan, won use in trade

Chinese media gave a prominent coverage to an agreement made between China and South Korea under which the two countries will utilize their currency swap valued at $59 billion to boost the use of the yuan and won in bilateral trade. The swap arrangement was established in late 2011.

South Korea‘s finance ministry said Dec. 4 that central banks of the two nations will begin lending trading firms yuan and won through banks from later this month for use in settling trade bills.

“Using local currencies for trade settlement has been a global trend since the end of the 2008-2009 global financial crisis,” Eun Ho-sung, deputy director general of the Bank of Korea‘s international department, was quoted as saying by the Global Times, a daily Chinese tabloid.

The agreement came after two years of talks between Seoul and Beijing and had nothing to do with Seoul's efforts to curb the won‘s volatility, according to the tabloid.

China's imports from South Korea constitute a quarter of its total imports, but payment made in yuan or won accounts for only about 3 percent as the bulk is settled in U.S. dollars.

Park Sae-jin swatchsjp@ajunews.com