The conclusion of a currency swap deal between South Korea and the US a week ago immediately stabilized local stock and currency markets, which were rattled by mounting concerns over the economic fallout from the global spread of the novel coronavirus.

The establishment of the $60 billion swap line, which will be in place for at least six months, was instrumental in snapping seven consecutive trading days of free fall in the local bourse Friday. It also helped stop the downward spiral in the value of the Korean won against the US dollar, which touched the lowest level in more than a decade last week.

But soon it became clear that the swap deal is insufficient, though essential, to stabilize the local stock and currency market. Korean stock prices and the won’s value against the greenback have fluctuated sharply since then.

Notably, the swap line with the US -- the second of its kind and double the size of the previous one set up in 2008 amid the global financial crisis -- has not led to stopping foreign sell-off of Korean shares. Offshore investors extended their net-selling streak to a 15th consecutive trading session Wednesday.

In a meeting of the emergency economic council held on the same day, the government decided to double the amount of the financial rescue package to 100 trillion won ($81.1 billion) from the 50 trillion won set aside in the council’s inaugural session last week.

The package includes launching a bond market stabilization fund worth 20 trillion won and a securities market stabilization fund worth 10.7 trillion won as a buffer against capital outflows.

Presiding over the meeting, President Moon Jae-in said the government would serve as a “stout breakwater” against possible turbulence in the financial market. He said every measure would be taken to prevent large companies and small business owners alike from going bankrupt due to the impact of the coronavirus pandemic.

But there remain concerns that local businesses could be drawn into a credit crunch stemming from a collapse in global supply chains, downgraded credit ratings and a sharp fall in exports.

Outbound shipments from Asia’s fourth-largest economy recorded an on-year increase in February and in the first 20 days of March after decreasing for 14 consecutive months. The unexpected increase, however, is attributable partly to more working days compared to the same period last year.

Should the coronavirus spread further across the globe, Korean exporters will be hit hard by decreased demand for their products, further aggravating economic conditions of the country which depends on trade for nearly 70 percent of gross domestic product.

Capital flight out of the country could pick up speed anytime if the local financial market is gripped by additional shocks.

Korea has suffered the second-largest outflow of foreign stock investment funds among major Asian emerging nations over the four weeks through March 18, according to recent data compiled by the Korea Center for International Finance. Offshore investors withdrew $10.24 billion from the Korean equity market during the cited period following Taiwan’s $13.2 billion, with China and Hong Kong excluded from the tally.

Government and Bank of Korea officials say the country has an optimal level of foreign currency reserves, which stood at $409.17 billion as of end-February.

But the currency reserves could be depleted rapidly if demand for dollars surges amid a global economic pandemic.

It is necessary for Korea to conclude currency swap deals with as many foreign countries as possible. Currently, it maintains swap lines with eight nations including the US and China.

Conspicuously missing from the list is Japan.

Seoul and Tokyo in 2015 ended their currency swap deal worth $10 billion, the last in a series of swap arrangements set up between the two sides since July 2001.

In January 2017, Tokyo suspended talks with Seoul on reopening a swap line in protest against the installation of a statue symbolizing Korean women forced into Japan’s wartime sexual slavery in a city here.

Korea should now step up efforts to reopen the swap line with Japan, which could make a significant contribution to heightening its breakwater against a possible currency crisis.

Historical issues should not be allowed to hinder the two neighboring countries from strengthening practical cooperation to build a future-oriented partnership.

Hopefully, the reestablishment of a bilateral swap line would help enhance collaboration between Seoul and Tokyo in coping with the spreading coronavirus and its global economic impact.