The Bank of Korea "Korea-US Currency Swap Fund Bidding... $8.72 Billion Awarded"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] The Bank of Korea announced on the 31st that out of the $12 billion in Korea-US currency swap funds, a total of $8.72 billion was bid, and the entire amount was awarded. The awarded $8.72 billion is scheduled to be actually supplied to the market on the settlement date, April 2nd.

The Bank of Korea stated that it conducted a foreign currency loan bidding targeting domestic commercial banks through the Bank of Korea’s financial network electronic bidding system from 10:00 to 10:30 a.m. on the same day. The bidding results showed a total bid amount of $8.72 billion ($7.92 billion for 84-day maturity and $0.8 billion for 7-day maturity), all of which was awarded.

The actual disbursement of funds to banks will occur on April 2nd.

Previously, the Bank of Korea signed a currency swap agreement worth $60 billion with the U.S. Federal Reserve (Fed). A currency swap is a contract that allows a country to deposit its own currency with the counterparty and receive the counterparty’s currency or dollars in return during emergencies such as foreign exchange crises.

Meanwhile, the won-dollar exchange rate in the Seoul foreign exchange market is showing a downward trend today. The exchange rate started at 1,223.0 won, down 1.4 won, and further widened the decline, fluctuating around the 1,220 won level.

This appears to be a factor that eases risk-averse sentiment toward emerging market currencies and stocks as central banks around the world continue to introduce economic stimulus measures. The news that the first tranche of Korea-US currency swap funds will be supplied is also calming concerns about dollar liquidity in the market.

Min Kyung-won, a researcher at Woori Bank, said, "Today, the Bank of Korea plans to supply 20% of the currency swap funds, so the temporary increase in supply burden will make aggressive bets on exchange rate rises difficult."

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