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S. Korea loosens FX liquidity guidelines on virus jitters

All News 08:17 March 26, 2020

SEOUL, March 26 (Yonhap) -- South Korea said Thursday the country will ease foreign exchange liquidity rules temporarily through May to ease the dollar shortage.

Under the plan, the foreign exchange liquidity coverage ratio (LCR) for banks will be lowered to 70 percent from the current 80 percent.

Local financial institutions have been required to hold an adequate amount of foreign currency assets on hand to get over short-term liquidity disruptions. The FX LCR is measured as high-quality liquid foreign assets to projected net cash outflows over 30 days.

South Korea said it will also temporarily exempt a levy on local financial firms to ease their burden in obtaining foreign currencies for a three-month period.

The levy is imposed on financial firms to maintain market stability in case the country suffers sudden inflows and outflows of foreign capital.
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