The ministry said the currency agreement is to promote bilateral trade and bolster financial cooperation between the two countries.

A currency swap is an arrangement between two countries to exchange one currency for another at a specific rate of exchange in a bid to use the powerful foreign currency to soothe volatility in the local currency market.

South Korea has swap deals with China, Malaysia, Australia and Indonesia. Seoul has been in talks with the United Arab Emirates to renew their swap arrangement.

However, South Korea's $10 billion bilateral currency swap agreement with Japan expired in 2015, 14 years after the two countries first signed the agreement in 2001. The Seoul-Tokyo talks to reopen the deal have been in a deadlock since January this year as the Japanese government broke off the talks for diplomatic reasons. (Yonhap)