REPUBLIKA.CO.ID, SEJONG--South Korea and Indonesia have agreed to sign a won-rupiah currency swap deal worth US$10 billion (IDR155 trillion). This move aimed at strengthening financial cooperation between the two countries, South Korea's Finance Ministry said on Sunday.

This agreement would bring the total value of currency swaps Indonesia has secured with foreign countries this year to boost its defence at an equivalent of $37bn, including a $15bn deal with China and a $12bn deal with Japan South Korea's Finance Minister Hyun Oh-seok and his Indonesian counterpart signed the deal during a meeting in Washington on Saturday (local time).

“The two sides agree that such arrangement will contribute positively to the stabilization of the regional financial market and strengthen bilateral economic and financial cooperation to counter against the growing uncertainties in the global economy,” South Korea’s finance ministry said in a statement. This agreement would expire in three years and could be renewed if both sides agree, ministry added.

The currency swap line in settling payments linked to their bilateral trade would be a move they expected to reduce their dependence on the U.S. dollar.

The agreement came as emerging countries including Indonesia were struggling to curb excessive cross-border capital outflows and currency weakness, sparked by growing speculation over the U.S. stimulus tapering. In an interview with Yonhap on Sept. 26, Indonesia's Coordinating Minister for Economy Hatta Rajasa said that a won-rupiah swap facility was likely to serve as "the second line of defense" if clinched.

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