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Korea to Get $4 Bln in Currency Swap Deal Next Month

Posted November. 28, 2008 03:00,   


The Bank of Korea from next month will receive four billion U.S. dollars from the U.S. Federal Reserve Board under a currency swap deal worth 30 billion dollars and lend the money to domestic banks.

The central bank said yesterday that it will put up a competitive auction Tuesday to distribute the greenback to banks under an agreement with the Fed that the funds go directly to domestic financial institutions.

Those eligible for the auction are financial institutions set up in accordance with banking law, including branches of foreign banks, the National Agricultural Cooperative Federation, the National Federation of Fisheries Cooperatives, the Korea Development Bank and Industrial Bank of Korea. With a maximum loan period of 88 days, those who borrow funds must repay by Feb. 26.

Lee Eun-mo, head of the foreign currency market team at the Bank of Korea, said an additional auction will be held depending on the foreign currency funding situation. "Provision of dollars is a preemptive action as dollar demand will increase at year’s end," he said.