S Korea's central bank to retrieve foreign currency loans after Fed declares end of currency swap line
www.chinaview.cn 2009-12-17 17:03:12   Print

    SEOUL, Dec. 17 (Xinhua) -- South Korea's central bank on Thursday announced that it recovered the remaining 450 million-U.S. dollar foreign currency loans extended to local banks a day after the U.S. Federal Reserve said it will close its swap arrangements with its central bank counterparts, including the Bank of Korea (BOK).

    With the retrieval, the BOK has the full amount it tapped from the swap arrangement with the U.S., which was worth 16.35 billion U.S. dollars, the BOK said.

    On Wednesday, the Fed announced that it will be working with its central bank counterparties to close its temporary liquidity swap arrangements by Feb. 1, 2010.

    The Fed, originally settling a 30 billion-U.S. dollar currency swap arrangement with the BOK on Oct. 30, 2008 amid a deepening liquidity crisis over the globe, has extended the deadline twice through Feb. 1 next year, when the accord will finally be terminated.

    The swap arrangement has reportedly helped stabilize the local currency as the nation was able to secure adequate amount of foreign reserves, local media said.

    "Even if the swap facility ends, it will have little impact on the South Korean financial market," Ahn Byung-chan, director general at the BOK's international bureau, was quoted as saying by local media.

    The Fed's move, according to Ahn, is a prearranged action which reflects the fact the global financial market situation is recovering.

    The finance ministry also interpreted it as a good signal, with Deputy Finance Minister Shin Je-yoon saying "it means there is no longer a risk of foreign liquidity crisis in (South) Korea."

    "Since we have abundant amount of foreign reserves, (the end of the swap line) will have no impact on the (South) Korean economy," Shin also said.

    South Korea's foreign reserves, the world's sixth-largest, rose to a record high of 270.89 billion U.S. dollars as of the end of November.

    South Korea currently has swap line agreements with China and Japan, reaching the accords in late December last year and expanding them to 30 billion U.S. dollars.

Special Report:  Global Financial Crisis

Editor: Wang Guanqun
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