To boost trade between the two nations and help reduce currency fluctuations, Australia and South Korea signed on Sunday a 3-year currency swap agreement worth $4.5 billion.
Inked by the respective central bank governors of Seoul and Canberra, Kim Choong-soo and Glenn Stevens, the deal would allow South Korea and Australia to purchase and repurchase each other's currency up to 5 trillion won. It could be renewed upon lapse.
The Central Bank of Korea said the deal is designed to promote bilateral trade which in 2013 reached $30 billion.
On one hand, South Korea is Australia's fourth-biggest trading partner and also the fourth-largest economy in Asia.
On the other hand, Australia is South Korea's seventh-largest trading partner, with the former shipping mostly minerals such as iron ore, coal and crude oil.
South Korea entered into similar currency swap deals in October with Indonesia worth $10 billion and with the United Arab Emirates worth $5.4 billion. It also has existing currency swap agreements with China worth 64 trillion won and with Japan worth $10 billion.
The signing ceremony was held on the sidelines of the yearly G-20 meeting of finance officials hosted by Sydney, Australia.
The Aussie dollar is the fifth most actively traded currency in the world, according to latest data from the Bank for International Settlements, accounting for 8.6 per cent of daily foreign trading volume. The top is the U.S. dollar (87 per cent), followed by the euro (33.4%), yen (23 per cent) and the British pound (11.8 per cent).