S. Korea’s c. bank moves to stabilise financial, FX markets
The Bank of Korea (BOK) will provide liquidity to stabilise financial and foreign exchange markets through irregular repurchase agreement (RP) starting today, according to its statement on Wednesday.
The BOK will broaden the scope of securities and institutions eligible for RP transactions to facilitate the smooth supply of Korean won liquidity. If necessary, the central bank will carry out RP purchases without limits.
In terms of bond markets, the bank will engage in outright purchases of treasury bonds and repurchases of monetary stabilisation bonds as needed, the bank’s statement mentioned.
Loans under the BOK Act will be swiftly addressed by the Monetary Policy Board. Foreign currency liquidity will be managed through RP transactions, and stability measures will be implemented for exchange rate fluctuations.
Steps have been implemented to facilitate quick adjustments to the net debit cap and collateral arrangements at financial institutions to ensure seamless payment and settlement operations, the report added.
The Korean economy’s strong fundamentals and external stability will help stabilise market sentiment. The board will closely watch financial and foreign exchange markets and take further action if necessary.
The Bank of Korea emphasised that these measures are temporary and will be implemented from December 4, 2024, to February 28, 2025.
Attribution: Bank of Korea report
Subediting: M. S. Salama
