SEOUL, March 31 (Yonhap) -- The Bank of Korea (BOK) was to inject US$12 billion into banks Tuesday in its first round of dollar lending using a currency swap line with the United States Federal Reserve in a bid to stabilize the currency market.
The 30-minute online auction starts at 10 a.m., and lenders will be allowed to apply for seven-day debt of $2 billion and $10 billion in 84-day loans, the central bank said in a statement.
The minimum bidding rate begins at 0.322 percent per year for seven-day debt and 0.3210 percent for the longer-dated loans. Successful bidders will actually receive dollars Thursday.
A BOK official said the dollar supply will help stabilize the currency market, and the central bank will auction off more dollars considering the market situation.
The money is the first batch of the BOK's $60 billion currency swap agreement signed with the U.S. central bank on March 19, aimed at tackling a dollar crunch and a plunge in the local currency sparked by the spread of the coronavirus and a plunge in oil prices.
South Korea's latest deal with the Fed is the second of its kind. In 2008, South Korea signed the first currency swap deal with the U.S. to cushion the country from the fallout from the global financial crisis.
Currently, South Korea has bilateral currency swap arrangements with eight countries, including Australia, Canada and China.
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