BOK offers US$4 bln in loans to local banks

SEOUL, Feb. 24 (Yonhap) -- South Korea's central bank said Tuesday it has provided US$4 billion in loans 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 $20.35 billion from the swap line so far.
According to the BOK, 14 financial institutions participated in the auction,
bidding for $5.25 billion on offer. The loans have an average annual interest
rate of 1.44 percent and will mature in 84 days.
Market jitters deepened amid concerns that local banks may not be able to pay
back their debt amid a dollar shortage. In recent sessions, the local currency
market has been gripped by fears that a capital flight by Japanese financial
firms may trigger a financial crisis.
The country's foreign exchange reserves declined for the eighth straight month
before rebounding in December as authorities unloaded part of their dollar
holdings to stem the won's fall and to ease the deepening credit squeeze. The
country's foreign reserves, the world's sixth-largest, totaled $201.74 billion as
of end-January.
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.