Has the Dollar Shortage Been Resolved?... Second Korea-US Currency Swap Auction Undersubscribed, $4.4 Billion Supplied

$8.5 Billion Bid Results in $4.415 Billion Award

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] The Bank of Korea announced on the 7th that it conducted a foreign currency loan auction for the second tranche of $8.5 billion out of the $60 billion Korea-US currency swap funds, resulting in a total bid of $4.415 billion, all of which was fully allotted.

For the 84-day term, $4.14 billion was bid, and for the 8-day term, $275 million was bid. The allotted dollars will be released into the market on the 9th.

On the 31st of last month, the Bank of Korea conducted the first foreign currency loan competitive auction using the Korea-US currency swap funds, amounting to $12 billion. At that time, the bid amount was $8.72 billion, which did not reach the supply limit.

A currency swap is a contract that allows a country to deposit its own currency with a counterpart country and receive the counterpart's currency or dollars in return during emergencies such as a foreign exchange crisis. As the global dollar shortage continued due to the impact of the novel coronavirus disease (COVID-19), the US Federal Reserve (Fed) signed currency swap agreements with various countries to stabilize the market.

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