S.Korea hopes currency swap with China to be extended -deputy fin min

SEJONG, South Korea, Jan 17 (Reuters) - South Korea on Tuesday said it hopes to extend a bilateral currency swap deal with China before it expires in October even with the political uncertainty in the background over Seoul’s decision to deploy a U.S. anti-missile system.

South Korea and China in April 2016 agreed in principle to extend a swap worth 360 billion yuan ($52.25 billion), but the row over the U.S. Terminal High Altitude Area Defence (THAAD) being deployed in Korea has chilled Seoul’s ties with Beijing.

Extending the swap “must be done, I think,” South Korea Deputy Finance Minister Song In-chang told reporters in Sejong, south of Seoul.

“The deal with China is worth about $56 billion, about half of the $120 billion we have in total (in currency swaps), he said.

He added that while failure to extend the deal “wouldn’t be a big immediate constraint”, that would mean the swap account’s limit “could be halved when things aren’t that great.”

Song referred to the swap as an “overdraft account” to use on rainy days.

Seoul has said it suspects China is taking indirect, retaliatory action against South Korea after objecting to its decision to deploy THAAD, on worries that it could used to spy Beijing’s military operations.

China recently rejected applications by South Korean carriers to add charter flights between the two countries.

Earlier this month, Japan suspended talks on a new currency swap agreement with South Korea over a feud over wartime history.

On Tuesday, Song said South Korea won’t seek further talks with Japan unless Tokyo initiates a discussion. ($1 = 6.8900 Chinese yuan) (Reporting by Cynthia Kim; Editing by Richard Borsuk)