SEOUL, March 6 (Yonhap) — South Korea and Indonesia signed a won-rupiah currency swap deal worth US$10 billion in a bid to strengthen financial cooperation between the two nations, the Bank of Korea (BOK) said Thursday.

With the deal, Seoul and Jakarta can exchange up to 10.7 trillion won or 115 trillion rupiah for three years, the central bank said. The three-year currency swap could be renewed if both sides agree at the time of expiration, it added.

The deal was signed by BOK Gov. Kim Choong-soo and his Indonesian counterpart Agus D.W. Martowardojo in Jakarta. The two nations agreed on the currency swap in October.

“This arrangement is designed to promote bilateral trade and further strengthen financial cooperation for the economic development of the two countries,” the BOK said in a statement.

“In particular, the arrangement will also ensure the settlement of trade in local currency between the two countries even in times of financial stress to support regional financial stability,” it added.

Indonesia is South Korea’s third biggest trade partner among 10 ASEAN countries. South Korea imported goods worth $13.2 billion from Indonesia in 2013, while its exports reached $11.6 billion.

A currency swap line is a tool to defend against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.

The Korean government has been seeking to utilize the deals to settle payments for trade as part of efforts to reduce its dependency on the U.S. dollar. It clinched similar swap deals with the United Arab Emirates
and Malaysia in the second half of last year, and recently with Australia last month.