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U.S. Treasury Secretary Janet Yellen speaks on the LG Science Park in Seoul, South Korea, Tuesday, July 19, 2022. / VCG
U.S. Treasury Secretary Janet Yellen speaks on the LG Science Park in Seoul, South Korea, Tuesday, July 19, 2022. / VCG
The U.S. and South Korea agreed on Saturday to implement liquidity services to stabilize monetary markets if wanted, South Korea’s finance ministry stated after a teleconference between finance chiefs of the 2 nations.
The received is close to its lowest since March 2009, and has weakened 17 p.c in opposition to the surging U.S. greenback to this point in 2022, amid a broad sell-off in rising market currencies because the Federal Reserve aggressively raises rates of interest.
“The 2 nations are able to work intently collectively to implement liquidity services when obligatory, reminiscent of when monetary instability is aggravated by the unfold of (a) liquidity crunch in main economies, together with [South] Korea,” the ministry stated in an announcement after the decision between the U.S. Treasury Secretary Janet Yellen and South Korea finance minister Choo Kyung-ho.
The settlement reached on Saturday repeats the U.S. assertion made when Yellen final visited Seoul in July, amid rising requires the Financial institution of Korea to rearrange a foreign money swap with the Fed to stabilize the dollar-won market.
Nevertheless, the assertion launched on Saturday didn’t elaborate on whether or not the services that could be deployed referred to a foreign money swap. South Korea’s finance ministry didn’t give additional particulars both.
A $60-billion foreign money swap pact, arrange in March 2020 between the central banks of the 2 nations as an emergency step to stabilize markets, expired on the finish of final 12 months.
Such a swap would permit South Korea to borrow a specific amount of U.S. {dollars} for a pre-set interval and fee, in alternate for received, in order to resolve difficulties in greenback liquidity.
To assist shield one of many world’s worst performing currencies, South Korean authorities have lately organized a $10 billion foreign money swap program with the nation’s state-run pension fund, a software that permits the fund to finance its abroad funding with the central financial institution’s international alternate reserves, as an alternative of shopping for {dollars} within the spot market.
Supply(s): Reuters
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