BOK to offer US$2 bln in loans to banks this week

SEOUL, April 13 (Yonhap) -- South Korea's central bank said Monday it will supply
US$2 billion to local banks this week, less than what it had previously offered
as the country's trade balance and overseas borrowing conditions improve.

The Bank of Korea (BOK) said it plans to offer up to $2 billion to local lenders
through 84-day swap deals on Tuesday out of $3 billion in loans it extended in
late-January that mature on Thursday of this week.
The money is part of a $30 billion currency swap agreement signed with the U.S.
Federal Reserve in late October.
"The move comes as the country's trade balance is expected to remain in the black
in April and foreign currency money market conditions have considerably improved,
helped by the efforts of local banks and companies to borrow from overseas," the
BOK said in a statement.
If local lenders take the full amount, the total value of the swap line tapped by
the BOK would fall to $14 billion from the current $15 billion, it added.
The central bank has been reducing its dollar supply since late last month as
foreign currency market conditions improved.
South Korea's trade surplus reached a record $4.6 billion in March as imports
dropped more sharply than exports. The country's current account swung to a
surplus in February and the BOK predicted that South Korea is likely to post a
record surplus of around $5 billion for March.
Hit by the collapse of Lehman Brothers Holdings Inc., local banks had been
suffering from dollar shortages, sparking concerns they may face difficulty in
meeting financial needs and servicing their debt.
Since October, the BOK has provided dollar liquidity to cash-strapped banks by
tapping foreign reserves or its currency swap line with the Fed.
South Korea's foreign exchange reserves rose by the largest monthly amount in
more than two years in March. The reserves totaled $206.34 billion as of the end
of March, the sixth-largest in the world.
South Korea also reached new currency swap arrangements with China and Japan in
mid-December, expanding its existing swap lines with the two countries to $30
billion each.
sooyeon@yna.co.kr
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