China and South Korea agreed on Friday to launch direct trading of their currencies within China by the end of June, saying this will expand trade and investment. The neighbouring countries began direct trade between the yuan and the won in South Korea in December 2014. Friday's agreement was reached at a meeting between the heads of the People's Bank of China (PBOC) and South Korea's finance ministry on the sidelines of the G20 meeting of central bank governors and finance ministers in Shanghai.
The PBOC and South Korea's Ministry of Strategy and Finance announced the agreement in separate statements. South Korea's finance ministry said the two officials also agreed to begin discussion on extending a bilateral currency swap arrangement for 360 billion yuan and 64 trillion won beyond the deadline of October 2017. The swap line, valued at between $51 billion and $55 billion at current exchange rates, could be a significant supplement for South Korea's ability to defend possible capital outflows as its foreign reserves stood at $367 billion at the end of January.
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