BOK to change rules on FX swap market to boost liquidity

SEOUL, Oct. 17 (Yonhap) -- South Korea's central bank said Friday it plans to revise currency swap market regulations to allow local banks to more easily secure dollar liquidity.

Under the new rules, the Bank of Korea (BOK) will trade directly with banks in
competitive biddings in the won-dollar swap market. Currently, the central bank
must first trade with intermediary banks, which then transact with local lenders.
"This new trading system is expected to help ease recent market jitters in the
foreign currency market," the BOK said in a statement. The first bidding will be
held on Tuesday, it said.
The won has dropped roughly 30 percent against the U.S. dollar so far this year
as overseas investors have continued to pull money out of local stocks, causing
Korean financial institutions to suffer a dollar shortage.
The central bank has pledged to continue providing U.S. dollars to the local swap
market until it stabilizes.
The local currency was trading at 1,320.75 won to the dollar as of 9:21 a.m., up
52.25 won from the previous session's close.
sam@yna.co.kr
(END)