(LEAD) S. Korea to provide US$10 bln to stabilize currency swap market

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SEOUL, Sept. 26 (Yonhap) -- South Korea's Finance Ministry said Friday that it will provide at least US$10 billion into the local currency swap market in an effort to calm market turmoil after the collapse of U.S. investment bank Lehman Brothers Holdings Inc. and provide more liquidity to tackle capital shortage.

"Since the U.S. financial turbulence, the hardest-hit area here is the foreign
currency market. We have decided to supply dollars there by using the nation's
foreign-exchange stabilization fund," Choi Jong-ku, head of the ministry's
international financial bureau, told reporters. "The amount will be at least $10
billion and it will be supplied to the market from this month until earlier next
month. If necessary, there will more dollar supply down the road."
Choi said that there have been some interventions in the swap market in the past
but the latest action would mark the largest-ever since the nation was hit by the
1997-98 financial crisis.
The intervention comes amid growing concerns that local companies and banks are
having difficulty securing foreign capital as the global market was shocked
recently by the collapse of the investment giant Lehman Brothers following a
broader fiasco earlier last week.
It is also in line with the comments by Finance Minister Kang Man-soo, who
earlier said that South Korea will take "preemptive" efforts to stave off a
shortage of U.S. dollars in the capital market.
kokobj@yna.co.kr
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