Swapping currencies


RGE Monitor notes this aspect of currency trading. (May require subscription for the full article)

Dec 12: South Korea and Japan have agreed to increase an existing unconditional KRW-JPY swap arrangement to $20bn from $3b effective until April 2009. This supplements a $10b agreement that can be used in times of crisis.China and South Korea agreed to a new bilateral KRW-CNY swap agreement worth USD28b for three years. The swap agreements give South Korea access to an additional USD35bn equivalent of foreign currencies (adding to the $30bn swap agreement with the Fed earlier) a major source of strength for KRW. They reflect closer co-ordination of economic and exchange rate policies within Asia particularly as Japan and China want to increasingly anchoring other weaker Asian currencies to JPY and CNY (Danske)

Other trades occur as well.