TOKYO (MNI) – Japanese and South Korean finance ministers may
discuss what has become a thorny diplomatic issue of whether to extend
the existing yen-won currency swap agreement if they meet in Tokyo next
week, a senior Japanese official said on Thursday.

The official, who declined to be named, told reporters that “it is
possible” that the two ministers will compare notes on global and
bilateral issues during the annual meetings of the International
Monetary Fund and the World Bank that Japan is hosting from Oct. 9 to
Oct. 14 .

The finance ministers and central bank governors from China and
South Korea are expected to attend the IMF/WB meetings in Tokyo despite
their territorial rows with Japan over small islands that have flared up
again this year, according to Japan’s Ministry of Finance.

Earlier this week, Japanese Finance Minister Koriki Jojima told
reporters that the government will consider carefully whether Tokyo
should extend its currency swap accord with Seoul amid a long-standing
bilateral territorial dispute.

Last year, Tokyo and Seoul increased the currency swap agreement to
$70 billion from $13 billion to ensure South Korea had ample dollar
funds amid global financial market turmoil caused by the European debt
and political crisis.

The temporary increase is effective until the end of October.

The yen-won swap agreement, which is designed for a non-crisis
situation, took effect in May 2005, with a view to stabilizing regional
financial markets through supplying short-term liquidity.

Tokyo has protested a visit in August by South Korean President Lee
Myung-bak to Takeshima — or Dokdo in Korean — a group of islets
between the two countries controlled by South Korea but claimed by

Japanese Prime Minister Yoshihiko Noda has also urged Lee to
apologize for his controversial remarks about Emperor Akihito.

Lee said the emperor would not be welcome in South Korea without a
direct acknowledgment of guilt for Japan’s colonial rule of the Korean
Peninsula from 1910 to 1945. Akihito acceded to the throne in 1989.

Meanwhile, anti-Japanese protests became violent in some Chinese
cities last month over Tokyo’s nationalization of the Senkaku Islands
also claimed by Beijing, with mobs looting Japanese-owned retail stores
and wrecking factories.
**MNI Tokyo Newsroom: 81-3-5403-4833 **

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