S. Korea eyes additional dollar supply to ease liquidity squeeze

SEOUL, Oct. 18 (Yonhap) -- South Korea's government is seeking to inject over US$30 billion into banks, exporters and the currency market in a bid to restore confidence and stabilization the financial sector, officials said Saturday.

The envisioned capital injection would come after the government's recent
announcement of a $15 billion liquidity provision in a move similar to the one it
took to help uncork credit conditions.
Currently, banks and companies are struggling to secure enough dollars to
refinance debts and carry out business deals amid mounting concerns over
financial instability.
According to sources at the Finance Ministry, the government will provide some
$20 billion to small- and medium-sized exporters while injecting $10 billion into
the won-dollar currency swap market.
The measure is currently under review by the government and the ruling Grand
National Party, with the final decision to be announced on Sunday along with
sweeping measures to stabilize wobbling local financial markets, the sources said
on condition of anonymity.
Market instability triggered by the subprime mortgage crisis in the U.S. recently
took a nasty turn following the collapse of the investment giant Lehman Brothers
Holdings Inc. last month.
Stock and currency markets have been going through a roller-coaster session amid
concerns that financial instability could tighten credit conditions further and
send the global economy into a recession.
To prop up market confidence, the government is reportedly mapping out diverse
measures, including capital injection, inter-bank loan guarantees and expanded
deposit insurance.
On Friday, Finance Minister Kang Man-so told reporters that the measures to be
unveiled on Sunday will be "preemptive, decisive and sufficient" actions.
kokobj@yna.co.kr
(END)