South Korea gained access Friday to new sources of foreign exchange to help fend off the global credit crunch, with its central bank announcing expanded currency swap agreements with Japan and China. The move should further alleviate concerns about South Korea's banks, which have had a tough time rolling over international debts because of difficulty obtaining dollars amid the global credit crisis. The South Korean and Japanese central banks increased a bilateral swap facility to the equivalent of $20 billion, the Bank of Korea said in statement. The bank also announced a deal with the People's Bank of China worth about $26 billion. Combined with existing agreements with those central banks as well as one with the US Federal Reserve, South Korea now has access to the equivalent of about $90 billion, almost half of the country's current foreign currency reserves. Swap agreements generally allow one central bank to borrow a currency from another, offering an equivalent amount of its own as collateral. The Bank of Korea's deal with the Fed in October allows it to obtain up to $30 billion through the end of April next year. So far, about $4 billion has been utilized. President Lee Myung-bak and other officials have said Seoul's cache of $200.51 billion in foreign exchange reserves, the world's sixth-largest, is enough to ensure no repeat of the 1997-98 Asian financial crisis that forced the country to seek a $58 billion bailout.
