(KPL/VNA) – Financial sources on January 9 revealed that the Republic of Korea (RoK)’s businesses will be able to make payments in the country's domestic currency, the won (KRW), to their trade partners from the Association of Southeast Asian Nations (ASEAN) members starting in the second half of this year at the earliest.

The new method of payment will come in a bid to cut down massive transaction fees charged in converting KRW to another currency, usually USD, or vice versa, and also to curb risks associated with fluctuating exchange rates.

The plan was visualised after it was addressed in the 2024 economic policy directions announced last week by the Ministry of Economy and Finance (MOEF) and the relevant ministries. The MOEF is pushing to revamp regulations on currency exchange within the first half to implement the plan.

In an exceptional case, the RoK allowed the KRW to be used as a method of payment with Iran in the 2010s after purchasing Iranian crude oil worth billions of USD when it needed to bypass Washington’s ban on USD transactions in trade with Tehran.

A source has revealed that given the fact that trade transactions using the KRW are rare, the new method of payment suggests the currency is regarded as credible and stable in addition to key currencies. The source pointed out that the KRW is experiencing heightened demand in ASEAN countries in the midst of fast-growing trade with the RoK.

Of the 10 ASEAN countries, Indonesia is touted as the first potential country to accept trade transactions using the KRW. The Philippines and Vietnam are also likely to follow suit soon. Once the new method of payment is adopted, Korean firms can deliver or receive transaction amounts in KRW via the Seoul branches of banks from corresponding ASEAN countries.

Meanwhile, the finance ministry in the long term seeks to expand Korea's currency in trade with countries from other regions, too, the source added.

KPL