South Korea is in talks with the United States to set up a foreign exchange (FX) swap line as part of a broader trade deal, Finance Minister Koo Yun-cheol said during a parliamentary session. The swap would help stabilize the won amid large planned U.S. investments and prevent market disruption.
Earlier this year, Seoul pledged $350 billion in investments to the U.S. in return for reduced tariffs. But many of those investments are intended as loans and guarantees, not upfront cash transfers, because of concerns about their impact on Korea’s foreign reserves.
Minister Koo suggested the direct investment Seoul would commit should be around $20 billion per year, a fraction of the total $350 billion. He noted that Washington has shown some understanding of Korea’s foreign exchange concerns.
Foreign Minister Cho Hyun also confirmed that the U.S. responded positively to revised proposals, including the FX swap possibility. Seoul aims to finalize its trade agreement by the Asia-Pacific summit in Gyeongju later in October.
This move comes as the won recently weakened beyond the 1,400 mark per dollar, triggering fears in markets. Observers say a swap line could act as a cushion, but it also hinges on Washington’s willingness to accept the terms.
If successful, the swap could ease currency stress and enable Seoul to deliver on its investment commitments without draining reserves. But the deal’s structure, limits, and political approval remain under negotiation.
