SEOUL, Oct. 13 (Xinhua) -- South Korea and the United Arab Emirates (UAE) signed a won-dirham currency swap deal on Sunday as part of their efforts to settle payments for bilateral trade with their own currencies instead of the U.S. dollar.
Central banks of the two countries agreed to set up a new swap line with their own currencies worth 5.8 trillion won (20 billion dirham or 5.4 billion U.S. dollars) to support trade settlement between Seoul and Abu Dhabi, the Bank of Korea (BOK) said in an e- mailed statement.
The contract will expire in three years, but it would be extended upon agreement when it matures, the BOK said.
South Korea has signed currency swap deals with some countries, including China, for trade settlement purposes, which will reduce its dependence on the U.S. dollar.
UAE is South Korea's fifth-largest oil exporter, with Seoul's crude imports from the Middle Eastern country taking up 9.3 percent of the total in 2012. Seoul's overall imports from Abu Dhabi reached 15.1 billion dollars last year, accounting for 2.9 percent of the total.
The move came a day after South Korea and Indonesia agreed to sign a won-rupiah currency swap contract of 10 billion dollars.
Under the contract, the two countries can exchange 10.7 trillion won for 115 trillion rupiah within three years. The swap line can be extended by agreement between the two sides.
Seoul and Jakarta said in a joint statement that the currency swap arrangement aimed to promote bilateral trade and further strengthen financial cooperation. Indonesia is South Korea's largest trading partner among the 10-member Association of Southeast Asian Nations (ASEAN), with bilateral trade reaching some 30 billion dollars in 2012.
Emerging economies in Asia, particularly Indonesia, suffered recently from a massive foreign capital exodus and its subsequent currency weakness caused by concerns over the tapering of U.S. bond purchases.