Japan and South Korea have decided not to renew a currency-swap agreement worth $57 million, an apparent gesture to cut a thread in relations amid brimming tensions over a territorial spat.
The two nations sought to expand their swap deal to a total of $70 billion from $13 billion in an attempt to cushion the economy from the global downturn caused by the sovereign debt crisis in Europe, the Financial Times reports. The $57 million expansion is set to expire by the end of this month.
“Given the stable financial markets and the sound macroeconomic conditions of both countries, they concluded that the extension of the increase of the bilateral swap arrangements is unnecessary,” a joint statement by the Bank of Korea and the Ministry of Strategy and Finance, released Tuesday, read. Japan’s finance minister, Koriki Jojima, told reporters in Tokyo that the ‘extra resources’ were now “unnecessary”.
The official announcement did not mention the territorial dispute while both sides denied that the move had any relation to the tug-of-war over the Dokdo, or Takeshima, islands. Analysts said that deteriorating ties may have played a part in the countries’ decisions.