Korea to reduce dollar supply to banks

SEOUL. April 6. KAZINFORM South Korea's central bank said on Monday that it will reduce its dollar supply to local banks scheduled for this week, with the country's trade and overseas borrowing conditions improving.

According to the Bank of Korea (BOK), it plans to auction off up to 2 billion U.S. dollars to local banks on Tuesday, down from its 3 billion-U.S. dollar loan extended in Mid-January. The money is part of the country's 30 billion-U.S. dollar currency swap arrangement with the U.S. Federal Reserve, settled in late October, and will be due Thursday, the BOK said. "The move comes as the country's trade balance is expected to stay in positive territory in April and the foreign currency money market conditions have improved with local banks' efforts to borrow from overseas," the BOK said in a statement. If the announced money amount is provided to local banks this week, the total amount of the swap line tapped by the BOK will decrease to 15 billion U.S. dollars from the current 16 billion U.S. dollars, it said. The BOK will flexibly decide on how much it will further provide in dollar liquidity after closely observing global financial markets and the country's current account balance, it added, Kazinform cites Xinhua.