[Asia Economy Reporter Jang Sehee] The Bank of Korea will provide liquidity to financial institutions on the 7th using the Korea-US currency swap funds contracted with the US Federal Reserve (Fed). The funds will be lent through a competitive bidding process, with a bid amount of 8.5 billion dollars.
On the 6th, the Bank of Korea announced that it will conduct the second competitive bidding foreign currency loan using the currency swap funds with the US Fed. This is the second supply following the first loan of 12 billion dollars released from the total 60 billion dollars fund.
The bid interest rate determination adopted a multiple price method. Each winning financial institution’s bid rate will be applied respectively. The total bid amount is 8.5 billion dollars, divided into 1.5 billion dollars for the 8-day term and 7 billion dollars for the 84-day term.
The minimum bid amount is 1 million dollars, and the maximum bid amounts are 225 million dollars for the 8-day term and 1.05 billion dollars for the 84-day term. The minimum bid interest rate will be announced on the day by adding 0.25 percentage points to the OIS (Overnight Index Swap) rate. The OIS rate is a one-day short-term interest rate traded among US financial institutions, corresponding to the call rate in Korea.
Meanwhile, during the 2008 global financial crisis, Korea-US currency swap funds were supplied to the market a total of five times.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
