SEOUL, May 18 ― Forming a currency swap agreement with the United States is unlikely to be discussed during President Joe Biden's visit this week as a way of countering the won's persistent decline, a senior South Korean official said today.

Deputy National Security Adviser Kim Tae-hyo said in response to a question from reporters that it was not a proper time to discuss that as a currency swap is usually discussed during a serious economic crisis.

“The Federal Reserve usually considers currency swap agreements at a time of serious economic crisis, but it's not that time now and our economic fundamentals are strong,” Kim told reporters while explaining about Biden's planned visit.

Biden is expected to arrive in South Korea on Friday and hold talks with South Korean President Yoon Suk-yeol.

There has been some speculation that South Korea may have to seek to form a currency swap agreement with the Federal Reserve to support the won, which has weakened some 6 per cent so far this year against the dollar on top of last year's 8.6 per cent fall.

The South Korean central bank formed a US$60 billion currency swap agreement with the US Federal Reserve in March 2020 as an emergency step to stabilise markets, and both sides let the agreement expire at the end of last year.

Under a bilateral currency swap, South Korea would be able to borrow a certain amount of US dollars for a pre-set period and at a pre-set rate in exchange for won at times of trouble in dollar liquidity. 

 - Reuters