SOUTH KOREA-FX Swap Deal Highlights Continued Thaw In Relations

Following a meeting between Japanese Finance Minister Shun'ichi Suzuki and his South Korean counterpart Kyoo Kyung-ho - the first of its kind since 2016 - the two countries have agreed to resume a USD10bn currency swap deal that was suspended in 2015 amid a deterioration in bilateral relations. See earlier FX Markets bulletfor more info.

• In a joint statement the ministers stated that "uncertainty over the global economic outlook is heightening", and that both "condemn Russia's war of aggression versus Ukraine."
• The agreement comes amid continuing signs of a notable thaw in Japanese-Korean relations amid joint security concerns about North Korean missile launches and a more assertive China in the Indo-Pacific region.
• For many years the US has sought to foster better relations between the neighbours who remain close to Washington, D.C., but have struggled to cooperate effectively. This has largely been due to long-standing grievances related to the Japanese occupation of the Korean peninsula in the first half of the 20thC.
• In a further sign of efforts to improve ties, Japanese Trade Minister Yasutoshi Nishimura announced earlier in the week that South Korea had been reinstated to Japan's 'white list' for exports with fast-track status from 21 July. South Korean trade ministry said the move means a "complete recovery of trust between the two countries in export control".