The central banks of Türkiye and South Korea have agreed to renew a currency swap agreement that allows the exchange of local currencies between the duo, the Turkish central bank said in a statement on Monday.

"The Central Bank of the Republic of Türkiye (CBRT) and Bank of Korea today renewed the Turkish lira-Korean won bilateral swap arrangement. Governor Fatih Karahan and Governor Chang Yong Rhee signed the arrangement," the bank said.

"The swap arrangement allows for the exchange of local currencies between the two central banks of up to TL 56.0 billion ($1.67 billion) or KRW 2.3 trillion, reflecting recent KRW/TRY exchange rates," it added.

The bank further said that the effective period for the arrangement is three years, starting from Monday, and could be extended by mutual agreement between the two sides.

"This arrangement is designed to promote bilateral trade through a swap-financed trade settlement facility and financial cooperation between the two countries. The two sides expect this to further strengthen collaboration between the two central banks," it noted.