South Korea, Malaysia in currency swap deal

Swap agreement is worth US$4.7 billion.

South Korea and Malaysia signed a currency swap agreement in a move to encourage bilateral trade and help limit currency swings. The agreement allows both countries to purchase and repurchase each other's currency of up to 5 trillion won (US$4.7 billion), or 15 billion ringgit.

The Bank of Korea, the central bank, said the deal is valid for three years and renewable upon agreement. The deal will allow greater flexibility for businesses to use local currencies for trades that have been commonly settled in U.S. dollars.

The latest agreement is the third currency swap deal South Korea has signed this month in a move to guard against financial turmoil and encourage trade with other emerging markets.

South Korea earlier this month struck currency swap deals worth US$10 billion and US$5.4 billion with Indonesia and the United Arab Emirates, respectively.