(Adds more quotes, data)
By Choonsik Yoo
SEOUL, June 18 South Korea aims to launch direct
trading of yuan/won this year, a senior government official said
on Wednesday, which is likely to boost trade with China while
helping Seoul prepare for the yuan's emergence as a major
"We hope that (direct trading) will contribute to
increasing trade and investment," Choi Hee-nam, head of the
finance ministry's international finance bureau, said by
telephone. "We are making preparations with the aim of beginning
it this year."
Bilateral trade between the two neighbouring countries has
soared to $229 billion by 2013 from just $6 billion in 1992,
when they established full diplomatic relations, but more than
99 percent of the deals are paid in U.S. dollars, he said.
Both the yuan and won are not fully
convertible globally and companies use the dollar as the main
currency for doing business with each other.
A senior official at the central bank, which along with the
finance ministry administers foreign exchange policy, said all
basic study was done and authorities were now examining
"China is our biggest trading partner but we have to worry
about dollar liquidity (at times of global turmoil) because we
have to use the dollar in trade with China," Ryoo Sang-dai, head
of the Bank of Korea's international department.
Both Choi and Ryoo said direct yuan/won trading could be
beneficial because South Korea has been running a current
account surplus with China, which in turn has been pressing use
of the yuan in foreign trade.
"(The yuan/won trading) will also help us acquire experience
and knowledge regarding the yuan and therefore take an
advantageous position internationally when the yuan becomes a
reserve currency," Ryoo said.
The finance ministry's Choi said ideas for the trade
included the government designating market-makers or the central
bank buying the yuan if demand fell short.
A Seoul-based senior executive at a global investment bank
said recently South Korea also wants to introduce direct
yuan/won trading partly because its huge current account surplus
has attracted criticism from the United States, even though much
of the surplus came from China.
He declined to be named, saying it was a sensitive issue.
But Choi said the planned launch of the yuan/won trading had
nothing to do with any opinion on the won's value.
The U.S. Department of Treasury criticised South Korea in a
biannual report in April for keeping the won cheap even as the
country runs a big current account surplus - $80 billion last
Official data shows $55.6 billion of South Korea's total
current account surplus came from China.
(Editing by Jacqueline Wong and Eric Meijer)