BOK to retrieve dollar funds from banks

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SEOUL, Aug. 3 (Yonhap) -- South Korea's central bank said Monday it will this
week complete retrieving the dollar funds it gave to local banks to help them
ride out a foreign-currency crunch.
The Bank of Korea (BOK) said it plans to recollect from local lenders the final
batch of US$600 million, which comes due on Thursday.
The BOK started retrieving dollar funds in late January after it injected a total
of $10.27 billion into the banking system from its foreign exchange reserves in
the October-December period.
Saddled with higher overseas short-term debt, local banks suffered from a severe
dollar shortage after the collapse of Lehman Brothers in September, which sparked
a global credit squeeze.
The country's recent sizable dollar inflows, however, have helped bolster foreign
currency liquidity, according to the BOK.
"The central bank has been gradually recovering the dollar funds due to large
current-account surpluses, continued foreign stock buying as well as a pickup in
banks' foreign currency condition," the BOK said.
As of the end of June, South Korea's foreign exchange reserves stood at $231.73
billion, hitting a nine-month high.
The central bank also plans to gradually recoup dollar lending issued from a $30
billion currency swap line with the U.S., depending on market conditions.
The BOK extended a combined $16.35 billion to local banks between
December-January. It began recollecting the funds in March and the remaining $8
billion comes due within two months.
South Korea 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.
pbr@yna.co.kr
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