By Seyoon Kim Dec. 12 (Bloomberg) -- South Korean President Lee Myung Bak is turning to his richer neighbors to help stem this year's 30 percent decline in the won, Asia's worst-performing currency. Japan's Prime Minister Taro Aso and China's Premier Wen Jiabao will meet Lee in Fukuoka, Japan, tomorrow to discuss the global financial crisis. Lee is keen to expand currency swap agreements with the world's biggest holders of foreign reserves to secure funds as the won's plunge and a credit freeze make it harder for Korean companies to finance overseas debt. South Korea wants to increase the dollar funds available to it to prevent a repeat of the currency crisis of 1997 that caused a run on the won and required a bailout from the International Monetary Fund to avoid a default on its debt. The Bank of Korea is scheduled to make an announcement on expanding its swap deals with China and Japan today. “Korea has really experienced what it can be like when it runs out of reserves and how bad the downside can be for the economy,” said Robert Subbaraman, chief economist at Nomura International Ltd. in Hong Kong. “Korea has been quite proactive in trying to secure greater cooperation in the region.” South Korea's Kospi stock index has risen 18 percent since a $30 billion swap line was agreed with the U.S. Federal Reserve on Oct. 30, suggesting that the arrangement reassured investors that South Korea would be able to service its debt. Before then the index had lost almost half its value. The won has gained almost 6 percent versus the dollar since the accord and rose for a sixth day today, up 0.6 percent to 1,350 against the dollar. Swap Agreement Lee's efforts may be paying off. Japan may more than double its swap agreement with South Korea to $30 billion from $13 billion, Nikkei English News reported yesterday. “Discussions are still under way including the amount and the timing of the announcement” with Japan, Choi Jong Ku, director general of the finance ministry's international finance bureau, said yesterday. “We're also in negotiations with China but nothing has been finalized.” South Korea has a currency-swap agreement of $4 billion with China. South Korea's foreign-exchange reserves fell for an eighth consecutive month to the lowest level in almost four years in November. Fitch Ratings last month cut its outlook for the nation's credit rating to negative from stable, signaling that shrinking reserves may pose a threat to the economy's stability. Smaller Impact “If sealed, the swap agreement with Japan and China may also provide a boost to the markets,” said Lim Jiwon, an economist at JPMorgan Chase & Co. in Seoul. Still, “because there have been reports Korea is looking to increase the swap line with Japan and China, the impact may be smaller than the Fed's.” Separately, the central banks of China, South Korea and Japan this week announced an agreement to meet in 2009, starting regular consultations to ensure currency stability in Asia. Finance ministers from 13 Asian nations, including South Korea, Japan and China, agreed in May to create a pool of at least $80 billion in foreign-exchange reserves to be tapped to protect their currencies. “This cooperation is kind of a regional self-rescue,” said Ding Zhijie, deputy dean of finance at Beijing's University of International Business and Economics. Leaders of the three nations meeting in Japan may also discuss pushing forward six-party talks on North Korea's nuclear issues, Kazuo Kodama, spokesman for Japan's Foreign Ministry, told reporters this week. To contact the reporter on this story: Seyoon Kim in Seoul at Skim7@bloomberg.net

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