Kim Dong-yeon, Minister of Trade, Industry and Energy, returns to Korea through Incheon International Airport in Yeongjongdo on the morning of the 14th, after holding follow-up consultations on South Korea-U.S. tariff negotiations in the United States. Yonhap News. 

The South Korean government recently proposed an "unlimited currency swap" with the United States during trade negotiations, but the U.S. expressed a negative stance, according to MBN.

According to broadcast reports on the 14th, the South Korean government's position is that a safeguard is necessary to prevent chaos in the foreign exchange market. However, the U.S. views potential currency volatility and credit risks as burdens and is therefore taking a negative stance. 

Earlier, according to government sources, South Korea recently proposed the establishment of an unlimited currency swap with the United States, Yonhap News reported. 

A currency swap is a type of "intergovernmental overdraft facility" where a country deposits its own currency with another country and can borrow the other country's currency at a pre-determined exchange rate.

In July, the two countries agreed that the U.S. would lower its reciprocal tariffs on Korea from 25% to 15% in exchange for Korea investing a total of $350 billion (approximately 488 trillion won) in the U.S.

During detailed negotiation discussions, the U.S. is demanding an increase in the proportion of direct cash investment.

If this were to occur, there is concern that a large amount of dollars would flow out of the country, causing the won/dollar exchange rate to surge. This is because, as of the end of last month, South Korea's foreign exchange reserves stood at $416.3 billion.

If an unlimited currency swap were established, it could serve as a safeguard to quell market instability, such as rapid exchange rate fluctuations.

Another official from the Presidential Office suggested to Yonhap News that "Kim Yong-beom, Chief Economic Secretary, has also hinted that various options are being discussed in relation to the negotiations," implying that a currency swap card is also being considered.

During a forum hosted by the Broadcasting Correspondents' Club on the 9th, Secretary Kim stated that "Japan is a key currency country, and its foreign exchange reserves are three times that of ours. Furthermore, it has an unlimited currency swap agreement with the U.S.," suggesting that these issues need to be resolved to improve negotiation conditions.

Some argue that the conclusion of a currency swap agreement is realistically difficult, and therefore it will likely remain as a negotiating card in response to U.S. pressure for direct investment.

South Korea and the U.S. have entered into currency swap agreements a total of two times during crisis situations: the 2008 global financial crisis and the 2020 novel coronavirus infection (COVID-19) pandemic.