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South Korea in talks with China on extending currency swap deal: BOK official

[SEOUL] South Korea is in talks with China on extending an existing bilateral currency swap deal, a Bank of Korea official said on Wednesday, as policymakers between the two nations try to navigate a year-long diplomatic stand-off between Beijing and Seoul.

"In regards to the currency swap (with China), working level officials are in talks with China to discuss extending of the deal," Lee Kang One, head of BOK's financial cooperation team, said in a briefing in Seoul on Wednesday.

The briefing was held as central bank governors from South Korea, China, and Japan began their two-day meeting in the city of Songdo, west of Seoul.

Mr Lee said talks on currency swaps are not part of the official agenda, and declined to give details of the meeting.

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The comments come as Asia's fourth largest economy has been hobbled by a row with Beijing over Seoul's deployment of a US anti-missile defence system in South Korea.

Upset over Seoul's decision to deploy the Terminal High Altitude Area Defense (Thaad) system, Beijing has been boycotting made-in-Korea products and tour groups to its smaller neighbour, widening the nation's services account deficit to US$15.7 billion in the first half - the worst on record.

The discord over the Thaad system has raised doubts on whether the US$56 billion swap deal, due to expire on Oct 10, would be extended.

South Korea's finance minister has publicly said the deal should be extended to cement existing financial safety nets.

BOK's Lee said the three governors gathered in Songdo will discuss leverage levels in the region, as all three economies share concerns about rapidly rising debt across public and private sector.

"Leverage levels is high all across Korea, China Japan in macroeconomic terms, and that will be subject of discussion."