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Central bank to extend US$12 bln to local banks

All News 13:15 March 29, 2020

SEOUL, March 29 (Yonhap) -- South Korea's central bank said Sunday it will provide US$12 billion in loans to local banks this week, a move that could ease a dollar liquidity crunch caused by the global spread of the new coronavirus.

The Bank of Korea (BOK) said the money is part of a $60 billion currency swap agreement signed with the U.S. Federal Reserve earlier this month.

The BOK said it plans to hold an auction Tuesday, and the loans will mature in seven days and 84 days, respectively.

Central bank to extend US$12 bln to local banks - 1

The BOK said the move is expected to help stabilize South Korea's foreign exchange market that has shown a high volatility due to a recent shortage of dollars.

The Korean won fell by 40 won to close at 1,285.70 won against the U.S. greenback on March 19, the lowest level in over a decade.

A currency dealer walks past an electronic signboard in the dealing room of KB Kookmin Bank in Seoul on March 19, 2020. The Korean won closed at 1,285.7 won to the U.S. dollar, the lowest in over a decade. (Yonhap)

Still, the latest currency swap deal has since helped strengthen the won's value. The local currency closed at 1,210.60 won against the U.S. dollar Friday, sharply up 22.2 won from the previous session's close.

In 2008, South Korea signed the first currency swap deal with the United States, which helped bring the won-dollar exchange rate to 1,170 won per dollar in February 2010 from 1,468 won per dollar at its start in October 2008.

Currently, South Korea has bilateral currency swap arrangements with eight countries, including Australia, Canada and China.


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