S. Korean central bank extends US$4 bln to banks

SEOUL, Dec. 2 (Yonhap) -- South Korea's central bank said Tuesday that it provided US$4 billion received from its U.S. counterpart to dollar-starved local banks.
The money provided through a competitive auction was part of a currency swap deal
forged last month, in which the U.S. Federal Reserve will provide up to $30
billion to the Bank of Korea.
According to the central bank, a total of 15 banks participated in the auctions.
The loans were extended at an annual interest rate of 6.839 percent on average,
and have a maturity of 84 days, 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.
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.
South Korea is seeking to expand similar deals with China and Japan to help
stabilize the local currency market.
sam@yna.co.kr
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