ID :
27511
Thu, 10/30/2008 - 16:53
Auther :
Shortlink :
http://m.oananews.org//node/27511
The shortlink copeid
Currency swap deal will help stabilize markets: finance minister
SEOUL, Oct. 30 (Yonhap) -- The currency swap arrangement agreed with the United States will contribute much to the stabilization of the wobbling local financial system, Finance Minister Kang Man-soo said Thursday.
Earlier, the U.S. Federal Reserve announced that it will sign a currency swap
deal of up to US$30 billion each with the central banks of South Korea, Mexico,
Brazil and Singapore, effective until April 30 of next year.
"The opening of the swap line with the U.S. will likely play a big role in
stabilizing our foreign currency and financial markets," Kang told reporters in a
press briefing held hours after the Fed's decision.
The currency swap deal with the U.S. came as South Korean banks and companies are
having difficulty in securing liquidity enough to service debts and pay for their
business activities.
The increased demand for dollars has put downward pressure on the won, with the
local currency falling over 35 percent against the dollar so far this year.
"The Fed's decision will help accelerate the move to expand similar currency swap
lines with Japan and China, intensifying concerted efforts among the three
nations to stabilize financial systems in the Asian region," Kang said.
South Korea has been attempting to shore up its wobbling financial markets with a
raft of measures in recent weeks to soothe growing jitters after the collapse of
major American investment banks last month.
Last week, the Finance Ministry announced that it will provide state guarantees
of up to $100 billion for external debts owed by cash-strapped local banks and
inject $30 billion worth of dollars directly into the financial system.
The Bank of Korea, the nation's central bank, also joined the efforts on Monday
by lowering its key interest rates by a record 0.75 percentage point to 4.25
percent, a move aimed at providing more liquidity to the market despite concerns
over its negative impact on the won's value.
Analysts expect that the new swap line with the U.S. along with other
stabilization measures will provide a respite for the worst-performing currency
and stock markets by bring back confidence and easing a dollar funding crunch for
banks and companies.
kokobj@yna.co.kr
Earlier, the U.S. Federal Reserve announced that it will sign a currency swap
deal of up to US$30 billion each with the central banks of South Korea, Mexico,
Brazil and Singapore, effective until April 30 of next year.
"The opening of the swap line with the U.S. will likely play a big role in
stabilizing our foreign currency and financial markets," Kang told reporters in a
press briefing held hours after the Fed's decision.
The currency swap deal with the U.S. came as South Korean banks and companies are
having difficulty in securing liquidity enough to service debts and pay for their
business activities.
The increased demand for dollars has put downward pressure on the won, with the
local currency falling over 35 percent against the dollar so far this year.
"The Fed's decision will help accelerate the move to expand similar currency swap
lines with Japan and China, intensifying concerted efforts among the three
nations to stabilize financial systems in the Asian region," Kang said.
South Korea has been attempting to shore up its wobbling financial markets with a
raft of measures in recent weeks to soothe growing jitters after the collapse of
major American investment banks last month.
Last week, the Finance Ministry announced that it will provide state guarantees
of up to $100 billion for external debts owed by cash-strapped local banks and
inject $30 billion worth of dollars directly into the financial system.
The Bank of Korea, the nation's central bank, also joined the efforts on Monday
by lowering its key interest rates by a record 0.75 percentage point to 4.25
percent, a move aimed at providing more liquidity to the market despite concerns
over its negative impact on the won's value.
Analysts expect that the new swap line with the U.S. along with other
stabilization measures will provide a respite for the worst-performing currency
and stock markets by bring back confidence and easing a dollar funding crunch for
banks and companies.
kokobj@yna.co.kr
