Japan and China talk swap deal resumption

Source: Xinhua | 2018-08-22

Japan and China are in talks to resume a currency swap arrangement between their central banks worth about 3 trillion yen (US$27.2 billion), Kyodo News agency said yesterday.

The resumption of the swap agreement represents a thaw in relations between the world’s second- and third-largest economies, which soured in recent years due to territorial disputes and tensions over Japan’s wartime history.

A Japanese finance ministry official confirmed the two sides were in talks but said the amount had not been decided yet.

Previously, Japan and China had a smaller currency swap in place, but it was allowed to expire in September 2013 amid a low point in Sino-Japanese relations.

Chinese Premier Li Keqiang flagged the proposed resumption of the swap agreement with Japan in May.

The Kyodo report said a deal would be announced at a financial dialogue to be held in Beijing this month, but the ministry official said it was more likely that it would come at an upcoming Japan-China summit.

China did not immediately respond to a faxed request for comment.

In case of financial turmoil, the swap could act as a safety net by providing yuan to Japanese banks operating in China and yen to Chinese businesses.