ID :
40429
Tue, 01/13/2009 - 16:01
Auther :
Shortlink :
http://m.oananews.org//node/40429
The shortlink copeid
BOK auctions off US$3 bln to local banks
(ATTN: CORRECTS figure in para 2; RECASTS para 5; ADDS more details about repo purchase from 7)
SEOUL, Jan. 13 (Yonhap) -- South Korea's central bank said Tuesday it auctioned
off US$3 billion to local banks which have been suffering from a dollar liquidity
crunch in the wake of the U.S.-sparked global financial turmoil.
The Bank of Korea (BOK) said the money is part of a $30 billion currency swap
agreement which it signed with the U.S. Federal Reserve in late October. The BOK
has tapped $13.35 billion out of the swap line so far.
According to the BOK, nine financial institutions participated in the auction,
bidding for $3 billion on offer. The loans have an average annual interest rate
of 1.12 percent and will mature in 84 days.
The move came amid rising market jitters about South Korea's falling foreign
exchange reserves, the world's sixth-largest.
The country's foreign reserves -- which totaled $201.22 billion as of the end of
December -- fell for eight consecutive months in 2008, before climbing slightly
in December as a weaker U.S. dollar boosted the dollar value of assets in other
currencies.
South Korea also reached new currency swap arrangements with China and Japan in
late December, expanding its existing swap lines with the two countries to $30
billion each.
In a separate move, the BOK said it pumped 1.03 trillion won ($757.8 million)
into the financial system through an auction by buying the 91-day repurchase
agreement deals out of a planned 1.5 trillion won.
The bidders were securities houses and the Korea Securities Finance Corp., which
provides financing to securities-related institutions, the BOK added. The move
aimed to ease strains in the market for debt instruments like commercial paper.
A repurchase agreement is a deal whereby one party sells the other a security at
a specified price with a commitment to buy the security back at a later date. It
is the central bank's main method of releasing liquidity into the market in a
credit crunch and siphoning off excess liquidity.
Despite recent deep rate cuts by the BOK, the returns on corporate bonds and
commercial paper have stayed at a high level compared with those of government
bonds due to a lack of buyers.
But on the back of the BOK's move, the return on the 91-day commercial paper
dropped 0.27 percentage point to 5.66 percent on Monday.
sooyeon@yna.co.kr
(END)
SEOUL, Jan. 13 (Yonhap) -- South Korea's central bank said Tuesday it auctioned
off US$3 billion to local banks which have been suffering from a dollar liquidity
crunch in the wake of the U.S.-sparked global financial turmoil.
The Bank of Korea (BOK) said the money is part of a $30 billion currency swap
agreement which it signed with the U.S. Federal Reserve in late October. The BOK
has tapped $13.35 billion out of the swap line so far.
According to the BOK, nine financial institutions participated in the auction,
bidding for $3 billion on offer. The loans have an average annual interest rate
of 1.12 percent and will mature in 84 days.
The move came amid rising market jitters about South Korea's falling foreign
exchange reserves, the world's sixth-largest.
The country's foreign reserves -- which totaled $201.22 billion as of the end of
December -- fell for eight consecutive months in 2008, before climbing slightly
in December as a weaker U.S. dollar boosted the dollar value of assets in other
currencies.
South Korea also reached new currency swap arrangements with China and Japan in
late December, expanding its existing swap lines with the two countries to $30
billion each.
In a separate move, the BOK said it pumped 1.03 trillion won ($757.8 million)
into the financial system through an auction by buying the 91-day repurchase
agreement deals out of a planned 1.5 trillion won.
The bidders were securities houses and the Korea Securities Finance Corp., which
provides financing to securities-related institutions, the BOK added. The move
aimed to ease strains in the market for debt instruments like commercial paper.
A repurchase agreement is a deal whereby one party sells the other a security at
a specified price with a commitment to buy the security back at a later date. It
is the central bank's main method of releasing liquidity into the market in a
credit crunch and siphoning off excess liquidity.
Despite recent deep rate cuts by the BOK, the returns on corporate bonds and
commercial paper have stayed at a high level compared with those of government
bonds due to a lack of buyers.
But on the back of the BOK's move, the return on the 91-day commercial paper
dropped 0.27 percentage point to 5.66 percent on Monday.
sooyeon@yna.co.kr
(END)
