Japan, China seek to restart FX swap lines in sign of warming ties – Kyodo

The currency swap deal will act as a safety net in case of financial turmoil by providing yuan to Japanese banks operating in China and yen to Chinese businesses.

On Tuesday, Japan’s Kyodo news agency reported, Tokyo and Beijing are in talks to resume a bilateral currency swap arrangement between their respective central banks. The potential currency swap deal is around 21.29 billion pounds (3 trillion yen).

The potential swap agreement underscores a thaw in relations between the world’s second and the world’s third biggest economies, which had soured in recent years due to Beijing’s territorial claims.

China and Japan had an existing currency swap deal in place but that was allowed to expire in September 2013 midst a low point in Sino-Japanese relations.

According to Kyodo’s report, the two countries are expected to reach an understanding on the potential currency swap deal at a bilateral financial dialogue which will be held in Beijing later this month.

In May 2018, Chinese Premier Li Keqiang had flagged the proposed resumption of the currency swap deal with Japan.

Tokyo aims to arrange a summit between Prime Minister Shinzo Abe and Chinese President Xi Jinping in October. The renewed swap agreement will underscore the growing cooperation between the two nations, said Kyodo without citing sources.

Japan’s finance ministry, which is responsible for currency swaps, did not immediately respond to requests for comments.

The People’s Bank of China did not immediately respond to a request for comment.

The currency swap deal will act as a safety net in case of financial turmoil by providing yuan to Japanese banks operating in China and yen to Chinese businesses.

($1 = 110.4900 yen)

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