China and South Korea have failed to extend their $56bn currency swap deal amid diplomatic tension over Seoul’s installment of a controversial US missile shield. According to the Financial Times, the extension of the eight-year-old deal had been seen as a yardstick for relations between the two neighbors, which have frayed over Seoul’s deployment of the Terminal High Altitude Area Defense despite Beijing’s opposition. South Korean officials said talks were continuing with China about renewing the deal, although experts remained skeptical about the possibility of resuming the swap. “As we talk, expiration isn’t all that important and negotiations are still taking place,” Lee Ju-yueol, Bank of Korea governor, said on Tuesday, hours before the deal expired. South Korean officials have expressed hopes for the extension of the swap, which has been regarded as a financial safety net that helps stabilize the won – often seen as a play on global growth – in case of external shocks.
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