TOKYO - Japan and South Korea have let their 14-year-old currency swap programme expire amid chilled bilateral relations.
While a currency swap accord between two countries is aimed at enabling each country to secure foreign currencies in need from the other during global financial crisis, chilly relations between Japan and South Korea have affected economic and financial cooperation between them.
South Korea said it does not need cooperation from Japan as it has an ample stock of foreign currency.
Japan and South Korea concluded a US$2 billion (S$2.7 billion) currency-swap agreement in 2001 in the wake of the Asian currency crisis that started in Thailand in July 1997 and seriously affected South Korea. To prepare for the possible recurrence of such a crisis, the programme was designed to help Seoul secure dollars through loans from Tokyo. The arrangement was expanded following the Lehman shock of 2008 and the European debt crisis of 2010 to reach $70 billion in 2011.
Senior Japanese finance ministry officials, such as Takehiko Nakao, who was then vice minister of finance for international affairs and is currently the president of the Asian Development Bank, saw the deal as a symbol of Japan's stepped-up economic and financial cooperation with South Korea and other neighbouring countries.
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