South Korea said on Sunday it has signed a bilateral local-currency swap agreement with Australia worth some $4.5 billion in a bid to minimise the impact on trade settlements at times of financial upheaval.
The agreement allows for the exchange of up to 5 trillion won ($4.7 billion) or A$5 billion ($4.5 billion) between the two countries, South Korea's central bank said in a statement. It is effective for three years and can be extended.
"The agreement will ensure that trade between the two countries can continue to be settled in local currency even in times of financial stress," the Bank of Korea said.
It said the two countries could also use the currency swap deal for other non-trade settlement purposes.
Australia is the fourth country South Korea agreed swap deals with in less than five months as it seeks to better protect itself against any future squeeze on international credit markets.
South Korea now has non-dollar currency swap agreements in place totalling $80.6 billion, the bulk of which is made up of a $56 billion deal with China's central bank, Bank of Korea data showed.
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