Banks' FX liquidity conditions 'sound' despite uncertainties: finance ministry

Economy 11:30 February 28, 2023

SEOUL, Feb. 28 (Yonhap) -- South Korean banks are maintaining sound foreign exchange liquidity conditions, the finance ministry said Tuesday, despite the growing uncertainties in the global foreign exchange market.

The assessment came after First Vice Finance Minister Bang Ki-sun held a meeting with officials from the Bank of Korea and other financial regulators to check South Korea's health in the FX market, according to the Ministry of Economy and Finance.

Local banks' foreign liquidity coverage ratios -- a major gauge of foreign currency liquidity holdings -- stood at around 132 percent this month, which is much higher than a regulatory requirement of 80 percent, the ministry said.

"Amid the rising volatility in the global financial market on woes over the prolonged monetary tightening of the U.S. Fed, the war between Russia and Ukraine and the reopening of China are anticipated to give mixed impacts on the South Korean economy," Bang said during the meeting.

Bang also pointed out the importance of close coordination among finance-related organizations to monitor the country's FX market amid such risks.

The South Korean won, meanwhile, fell around 3.5 percent against the greenback so far this year.