Korean businesses will be able to make payments in Korean won to their trade partners from ASEAN countries starting in the second half of the year at the earliest, according to financial sources, Tuesday.
The new method of payment will come in a bid to cut down massive transaction fees charged in converting Korean won to another currency, usually U.S. dollars, or vice versa, and also to curb risks associated with fluctuating exchange rates.
The plan was visualized after it was addressed in the 2024 economic policy directions announced last week by the Ministry of Economy and Finance and the relevant ministries.
The finance ministry is pushing to revamp regulations on currency exchange within the first half to implement the plan.
In an exceptional case, Korea allowed the won to be used as a method of payment with Iran in the 2010s after purchasing Iranian crude oil worth billions of dollars when it needed to bypass Washington’s ban on U.S. dollar transactions in trade
with Tehran.
“Given the fact that trade transactions using Korean currency are rare, the new method of payment suggests the Korean won is regarded as credible and stable in addition to key currencies,” a source said.
The source pointed out that Korea’s currency is experiencing heightened demand in ASEAN countries in the midst of fast-growing trade with Korea.
Of the 10 ASEAN countries, Indonesia is touted as the first potential country to accept trade transactions using the Korean won. The Philippines and Vietnam are also likely to follow suit soon.
Once the new method of payment is adopted, Korean firms can deliver or receive transaction amounts in Korean won via the Seoul branches of banks from corresponding ASEAN countries. Source: korea times
