ID :
35317
Sat, 12/13/2008 - 06:36
Auther :
Shortlink :
https://www.oananews.org//node/35317
The shortlink copeid
(2nd LD) S. Korea expands currency swaps with Japan, China
(ATTN: RECASTS headline, lead; UPDATES with more info from para 2)
SEOUL, Dec. 12 (Yonhap) -- South Korea has agreed to expand currency swaps with Japan and China in a bid to help ease a short-term liquidity shortage in the financial system, Seoul's central bank said Friday.
The Bank of Korea (BOK) said the agreement will raise the existing swap lines
with the Bank of Japan (BOJ) and the People's Bank of China to US$30 billion
each.
Currently, South Korea can draw $13 billion from Japan with tapping up to $10
billion through a won-dollar swap line and the remainder through a won-yen swap
facility. This time, the BOK has agreed with the BOJ to expand the won-yen swap
line to $20 billion, it added.
At the same time, the BOK, which currently can tap up to $4 billion through a
won-dollar swap facility from the People's Bank of China, has signed a new
won-yuan swap agreement to have access to $26 billion, it added.
"The move will mitigate adverse influences of the global financial turmoil and
improve liquidity conditions," the BOK said.
Market watchers said the move will have a positive effect on the financial market.
"South Korea's expansion of currency swap agreements with Japan and China will
help ease some jitters about falling foreign exchange reserves and a weaker won.
But as the news has already been factored into the market, the impact of the
won's gain would be limited," said Jeon Seung-ji, a currency analyst at Samsung
Futures Inc.
Despite the news, the local currency closed at 1,372.5 won to the greenback, down
14 won from Thursday's close as dollar demand remained strong after the U.S.
Senate rejected a bailout plan for the ailing auto industry.
In late October, the BOK announced a $30 billion currency swap agreement with the
U.S. Federal Reserve tapping $7 billion out of the swap line so far.
The latest move comes amid a dollar shortage in the local financial market, which
has been impacted by the collapse of U.S. investment bank Lehman Brothers
Holdings Inc. The local currency has fallen about 32 percent against the U.S.
dollar so far this year.
Concerns have been mounting over South Korea's foreign exchange reserves, the
world's sixth-largest, as they declined for the eighth straight month in November
due to liquidity injections designed to ease an ongoing credit crunch and
financial jitters.
The foreign reserves totaled $200.51 billion as of end-November, down $11.74
billion from a month ago. South Korea has pumped $31.9 billion into the local
financial system over the past two months from a planned $55 billion to ease the
frozen credit market.
sooyeon@yna.co.kr
(END)
SEOUL, Dec. 12 (Yonhap) -- South Korea has agreed to expand currency swaps with Japan and China in a bid to help ease a short-term liquidity shortage in the financial system, Seoul's central bank said Friday.
The Bank of Korea (BOK) said the agreement will raise the existing swap lines
with the Bank of Japan (BOJ) and the People's Bank of China to US$30 billion
each.
Currently, South Korea can draw $13 billion from Japan with tapping up to $10
billion through a won-dollar swap line and the remainder through a won-yen swap
facility. This time, the BOK has agreed with the BOJ to expand the won-yen swap
line to $20 billion, it added.
At the same time, the BOK, which currently can tap up to $4 billion through a
won-dollar swap facility from the People's Bank of China, has signed a new
won-yuan swap agreement to have access to $26 billion, it added.
"The move will mitigate adverse influences of the global financial turmoil and
improve liquidity conditions," the BOK said.
Market watchers said the move will have a positive effect on the financial market.
"South Korea's expansion of currency swap agreements with Japan and China will
help ease some jitters about falling foreign exchange reserves and a weaker won.
But as the news has already been factored into the market, the impact of the
won's gain would be limited," said Jeon Seung-ji, a currency analyst at Samsung
Futures Inc.
Despite the news, the local currency closed at 1,372.5 won to the greenback, down
14 won from Thursday's close as dollar demand remained strong after the U.S.
Senate rejected a bailout plan for the ailing auto industry.
In late October, the BOK announced a $30 billion currency swap agreement with the
U.S. Federal Reserve tapping $7 billion out of the swap line so far.
The latest move comes amid a dollar shortage in the local financial market, which
has been impacted by the collapse of U.S. investment bank Lehman Brothers
Holdings Inc. The local currency has fallen about 32 percent against the U.S.
dollar so far this year.
Concerns have been mounting over South Korea's foreign exchange reserves, the
world's sixth-largest, as they declined for the eighth straight month in November
due to liquidity injections designed to ease an ongoing credit crunch and
financial jitters.
The foreign reserves totaled $200.51 billion as of end-November, down $11.74
billion from a month ago. South Korea has pumped $31.9 billion into the local
financial system over the past two months from a planned $55 billion to ease the
frozen credit market.
sooyeon@yna.co.kr
(END)
