Indonesia sees possible currency swap deal with Korea

Indonesia's economic minister said Thursday that his country and South Korea have been discussing a possible currency swap line, which he says could serve as "the second line of defense," if reached. Finance ministers from the two countries had discussed the issue at the recent meeting of the G20 group although the two countries' central banks have not yet reached an agreement on the deal, according to Coordinating Minister for Economy Hatta Rajasa. "I believe that leaders (from the two countries) will discuss economic (issues) and also discuss specially the swap arrangement," the Indonesian minister said in an interview with Yonhap News Agency, referring to an expected state visit by South Korean President Park Geun-hye next month. President Park will attend a summit of the Asia-Pacific Economic Cooperation (APEC) forum to be held on Indonesia's resort island of Bali on Oct. 7-8. The talks about the currency swap line came as emerging countries such as India and Indonesia are struggling to curb excessive cross-border capital outflows and currency weakness, sparked by growing speculation over the U.S. monetary tapering. In an effort to help bolster a weakening rupiah, Indonesia extended a $12 billion swap facility with Japan in August. Southeast Asia's largest economy also may extend a 100 billion yuan (US$16.4 billion) swap line with China, which was signed in 2009 and expired last year. The minister said the possible swap facility is likely to serve as "the second line of defense" if clinched, adding that a combined size of the currency swap lines with the three countries may reach around $40 to $50 billion. "I'm not sure of (the size), but I believe that in total it would be more than $40 billion," he added.