End of currency swap with U.S. to have little impact on Korea: gov't

SEOUL, Dec. 17 (Yonhap) -- The possible end of a swap arrangement between the
U.S. and South Korea will not have a negative impact on Asia's fourth-largest
economy, a high-ranking official said Thursday.

"Currently, South Korea has adequate foreign exchange reserves and its foreign
currency liquidity conditions are steady. Even if the swap facility ends, there
will not be any impact on the South Korean economy," Deputy Finance Minister Shin
Je-yoon said.
On Oct. 30, 2008, the U.S. Federal Reserve announced a US$30 billion currency
swap arrangement with the Bank of Korea (BOK) in the midst of rising global
financial turmoil, a move aimed mainly at helping stabilize the Korean currency.
The accord was extended through Feb. 1.
But on Wednesday, the Fed said in a statement that it is working with other
central banks to close temporary liquidity swap arrangements by Feb. 1, raising
the possibility that the U.S. may not continue to extend the swap facility with
South Korea.
The swap line came as the local currency was pounded by concerns over a possible
dollar shortage in South Korea following the collapse of the U.S. investment bank
Lehman Brothers Holdings Inc. The won tumbled 25.7 percent to the dollar last
year alone.
The arrangement helped ease fears about declining foreign reserves, stabilizing
the local currency.
South Korea's foreign reserves, the world's sixth-largest, rose to a record
$270.89 billion as of the end of November.
In a related move, South Korea reached new currency swap arrangements with China
and Japan in mid-December last year, expanding its existing swap lines with the
two countries to $30 billion each.
sooyeon@yna.co.kr
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