Bank of Korea Steps Up Liquidity Supply... 1 Trillion Won RP Purchase

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] As the Bank of Korea had announced, it has started purchasing repurchase agreements (RP). This move follows the historic cut of the base interest rate to an annual 0.75%, the lowest ever, and is interpreted as a full-scale effort to expand liquidity.

On the 19th at 10 a.m., the Bank of Korea conducted a competitive bidding for RP purchases worth 1 trillion won. This RP purchase is for a 14-day term, with the purchase date on March 19 and the repurchase date on April 2.

The bidding institutions are non-bank RP counterparties among all contracted institutions, including Mirae Asset Daewoo, Samsung Securities, Shin Young Securities, NH Investment & Securities, and Korea Securities Finance.

RP transactions are part of the Bank of Korea's open market operations and represent a key tool for managing liquidity. While RP transactions are conducted regularly, under normal circumstances, the Bank absorbs market liquidity through RP sales. Conversely, RP purchases signify the supply of liquidity.

Previously, the Bank of Korea had announced it would conduct RP purchases targeting non-bank institutions within March.

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