Bank Forward Exchange Position Limit Increased by 25%... Domestic 50%, Foreign Bank Branches 250% (Supplement)

Ministry of Economy and Finance, Financial Services Commission, Bank of Korea, Financial Supervisory Service 'Macroeconomic Financial Meeting'
Domestic Banks 40%→50%, Foreign Banks 200%→250% Expansion

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] The government has decided to expand the forward foreign exchange position limit for banks by 25% as a measure to alleviate supply-demand imbalances in the swap market through increased foreign currency liquidity supply. This measure will take effect from the 19th.

The Ministry of Economy and Finance, Financial Services Commission, Bank of Korea, and Financial Supervisory Service held a macroeconomic and financial meeting on the 18th to review the current status of domestic foreign currency liquidity and discuss response measures, deciding accordingly.

According to the prepared contingency plan, the Ministry of Economy and Finance will expand the forward foreign exchange position limit for domestic banks from 40% to 50%, and for foreign bank branches from 200% to 250%.

The forward foreign exchange position limit was introduced on October 10 last year to curb rapid capital inflows and short-term borrowing, and has been flexibly managed according to market conditions and other soundness system reforms.

Meanwhile, the government stated that it is monitoring the foreign exchange swap market trends and overseas funding conditions on a daily basis and will closely support companies and financial institutions to ensure no difficulties arise in foreign currency procurement.

This content was produced with the assistance of AI translation services.