BOK offers US$4 bln in loans to local banks

(ATTN: CORRECTS the amount of swap line tapped by BOK in para 2)
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
total amount of the swap line tapped by the BOK held steady at $16.35 billion as
local banks repaid $4 billion in loans, which the BOK previously extended in
early December.
According to the central bank, 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 due to 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 Korean 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.
sooyeon@yna.co.kr
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