Japan and South Korea signed Friday a bilateral currency swap agreement to enable access to the other's funds in times of emergency, reviving an arrangement that expired eight years ago amid the cooling of ties over wartime history.
The signing of the $10 billion swap arrangement came after the finance ministers of both nations agreed to revive it during talks in June.
The deal allows the nations to exchange their respective currencies for the dollar, according to the Japanese Finance Ministry.
The previous arrangement ended in 2015 and was not renewed amid friction over South Korea-controlled, Japan-claimed islets in the Sea of Japan and the long-standing issue of Korean women forced to work in Japanese wartime military brothels.
Since Yoon Suk Yeol became South Korea's president in 2022, bilateral ties have been improving.
While disputes stemming from Japan's 1910-1945 colonial rule of the Korean Peninsula linger, Prime Minister Fumio Kishida and Yoon have been seeking to deepen ties between the two nations and with their key ally the United States to tackle common challenges, especially a nuclear-armed North Korea.
With both Japan and South Korea currently holding sufficient foreign exchange reserves, experts do not see an imminent need for the agreement to be used.
Japan has similar arrangements with India and some members of the Association of Southeast Asian Nations.
