The Bank of Korea (BOK) Governor Lee Seong-tae said Wednesday that a currency swap deal between the United States and South Korea would ease the U.S. dollar shortage of local lenders and help the country to stabilize the financial market, according to local media Thursday.
The U.S. Federal Reserve announced Wednesday that it would signa currency swap arrangement of up to 30 billion U.S. dollars each with 4 emerging markets -- South Korea, Mexico, Brazil and Singapore - to ease their U.S. dollar funding amid the global financial crisis, the national news agency Yonhap said.
"The currency swap deal with the U.S. Federal Reserve will help stabilize the local financial market and also contribute to stabilizing the currency market." said Lee.
Despite having more than 240 billion U.S. dollar worth of foreign reserve, South Korea's currency has plummeted more than 30percent so far this year.
Amid concerns that local banks may face difficulty repaying short-term foreign debts, foreign investors have continuously pulled a huge amount of money out of local stocks which led to a huge decline of won value against the U.S. dollar.
With the currency swap, South Korean market hopes to bring foreign investment back into the South Korean market and stabilize its currency market.
Source: Xinhua
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