By
The agreement to end the expanded swap arrangements, which have helped boost defences against the risk of a potential capital flight, come at a time when the two countries are at a tense diplomatic standoff over disputed islands.
The value of bilateral currency swap arrangements between the two neighbouring economic powerhouses will now return to $13 billion from $70 billion previously, South Korea's central bank said in a statement.
"(The two countries) have decided to let the arrangements expire after taking into account our significantly improved external soundness and the increased stability in domestic and international financial markets," the Bank of Korea said.