Coronavirus News Asia

Fed gives Korea a helping hand with dollar deal

 Trade-dependent South Korean gained a powerful new arsenal of liquidity ammunition as the US Federal Reserve offered a currency swap to the Bank of Korea late on Thursday.

On Friday, Seoul’s previously bearish markets were in a bouncy mood. At lunchtime, the KOSPI stock index was up by 4.49% and the South Korean won – which had been touching 11-year lows – had gained more than 1% against the dollar.

The currency swap facility with the Fed, worth US$60 billion over a contract period of at least six months, means the BOK can borrow dollars directly from the Fed in exchange for won, avoiding dollar shortages even if local banks and firms cannot finance greenbacks in the market.

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