ID :
32659
Thu, 11/27/2008 - 21:22
Auther :
Shortlink :
http://m.oananews.org//node/32659
The shortlink copeid
(3rd LD) S. Korea to receive US$4 bln from U.S. in currency swap
(ATTN: UPDATES currency rate in 6th para; ADDS more details in last three paras)
SEOUL, Nov. 27 (Yonhap) -- South Korea's central bank said Thursday that it will receive US$4 billion from the U.S. Federal Reserve through a currency swap agreement to provide the greenback to dollar-starved local banks.
The money to be provided on next Tuesday through a competitive auction is part of
a currency swap deal forged last month, in which the Fed will provide up to $30
billion to the Bank of Korea.
The agreement will be effective until April 30 of next year.
The local currency has lost almost 37 percent against the dollar so far this year
as foreign investors continued to pull money out of the local stock market due to
global financial turmoil and a widening current account shortfall.
"The central bank expects the facility to provide the U.S. dollar funding
opportunities to the banks and contribute to improving foreign currency funding
conditions and relieving
market concerns," the bank said in a statement.
The won closed at 1,476.00 to the dollar, up 2.1 won from the previous session's
close.
South Korea is also seeking to expand similar deals with China and Japan to help
stabilize the local currency market.
South Korea posted a record current account surplus in October, which may help
ease downward pressure on the already-weak won, the central bank said earlier in
the day.
Experts said that the dollar supply from the Fed and a current account surplus
will help stabilize the currency market, but market jitters still remained due to
declining exports and a continued foreign sell-offs of local stocks.
The South Korean economy, Asia's fourth-largest, has seen its export growth slow
in the past few months in tandem with a global economic slump, while its import
bills increased sharply due to higher oil prices. South Korea is the world's
fourth-largest oil importer.
South Korea's overseas sales, which account for more than half of gross domestic
product, increased 10 percent in October from a year earlier, the weakest pace in
13 months.
Also, foreign investors' selling spree of local stock continued on concerns about
economic slump.
"The currency swap deal with the U.S. is nothing new," said Kim Yong-joon, a
researcher at Korean Center for International Finance. "The move will help
relieve market concerns to some degree... but more steps such as currency swaps
with China and Japan are necessary to curb the won's fall against the dollar."
According to the central bank, South Korean banks as well as the local branches
of foreign banks can participate in auctions. The loans will have a maximum
maturity of 88 days, and interest rates will be determined before each auction,
it said.
The step came amid concerns that the country's foreign exchange reserves, the
world's sixth-largest, are drying up fast as currency authorities spent part of
the reserves to buttress up the falling won and extended dollar liquidity to the
financial system.
The foreign reserves totaled $212.25 billion at the end of October, declining
$27.4 billion from the month before, the largest recorded on-month drop.
sam@yna.co.kr
(END)
SEOUL, Nov. 27 (Yonhap) -- South Korea's central bank said Thursday that it will receive US$4 billion from the U.S. Federal Reserve through a currency swap agreement to provide the greenback to dollar-starved local banks.
The money to be provided on next Tuesday through a competitive auction is part of
a currency swap deal forged last month, in which the Fed will provide up to $30
billion to the Bank of Korea.
The agreement will be effective until April 30 of next year.
The local currency has lost almost 37 percent against the dollar so far this year
as foreign investors continued to pull money out of the local stock market due to
global financial turmoil and a widening current account shortfall.
"The central bank expects the facility to provide the U.S. dollar funding
opportunities to the banks and contribute to improving foreign currency funding
conditions and relieving
market concerns," the bank said in a statement.
The won closed at 1,476.00 to the dollar, up 2.1 won from the previous session's
close.
South Korea is also seeking to expand similar deals with China and Japan to help
stabilize the local currency market.
South Korea posted a record current account surplus in October, which may help
ease downward pressure on the already-weak won, the central bank said earlier in
the day.
Experts said that the dollar supply from the Fed and a current account surplus
will help stabilize the currency market, but market jitters still remained due to
declining exports and a continued foreign sell-offs of local stocks.
The South Korean economy, Asia's fourth-largest, has seen its export growth slow
in the past few months in tandem with a global economic slump, while its import
bills increased sharply due to higher oil prices. South Korea is the world's
fourth-largest oil importer.
South Korea's overseas sales, which account for more than half of gross domestic
product, increased 10 percent in October from a year earlier, the weakest pace in
13 months.
Also, foreign investors' selling spree of local stock continued on concerns about
economic slump.
"The currency swap deal with the U.S. is nothing new," said Kim Yong-joon, a
researcher at Korean Center for International Finance. "The move will help
relieve market concerns to some degree... but more steps such as currency swaps
with China and Japan are necessary to curb the won's fall against the dollar."
According to the central bank, South Korean banks as well as the local branches
of foreign banks can participate in auctions. The loans will have a maximum
maturity of 88 days, and interest rates will be determined before each auction,
it said.
The step came amid concerns that the country's foreign exchange reserves, the
world's sixth-largest, are drying up fast as currency authorities spent part of
the reserves to buttress up the falling won and extended dollar liquidity to the
financial system.
The foreign reserves totaled $212.25 billion at the end of October, declining
$27.4 billion from the month before, the largest recorded on-month drop.
sam@yna.co.kr
(END)
