South Korea to boost dollar supply to ease pressures
SEOUL: South Korea said on Wednesday it would inject more dollars into its banking system to ensure businesses have enough funding, amid concerns about the deepening global economic impact of the coronavirus pandemic.
The finance ministry and the Bank of Korea announced moves that are expected to beef up dollar supply in the market by $5 billion to $10 billion, as the coronavirus causes chaos in global financial markets and a scramble for US dollars.
Authorities will raise a cap on foreign currency forward positions for local banks to 50 per cent of their equity capital from the current 40 per cent starting on Thursday. For foreign banks, the ceiling will be relaxed to 250 per cent from 200 per cent.
South Korean policymakers have unveiled a string of measures in recent days, including an emergency interest rate cut and an extra 11.7 trillion won ($9.43 billion) budget, in a bid to reduce pressure on Asia’s fourth-largest economy and keep its financial system operating normally.
Though the number of new virus cases is declining domestically, they continue to soar internationally, raising fears of a global recession.
“We’re in a very grave situation on both aspects of disease prevention and the economy”, President Moon
Jae-in told a meeting with economic policymakers.
“The economy is more worrisome, and the people’s livelihood . ... The problem is it is difficult to overcome the crisis on our own.”
The Korea Centers for Disease Control and Prevention (KCDC) reported 93 new coronavirus cases on Wednesday. It was the fourth day in a row that there were fewer than 100 new infections, although it slightly up from 84 the day before.
South Korea now has 8,413 confirmed cases, the KCDC said. The death toll rose by three to 84.
But authorities remain on high alert amid concerns about small clusters of infections reported over the past few weeks.
Of the new cases, 46 were from the hardest-hit city of Daegu where a new outbreak emerged in a nursing home, although the KCDC did not specify how many cases were traced to that facility.
Authorities have launched extensive checks on tens of thousands of “high-risk” facilities, including nursing homes, hospitals, call centres, computer cafes and karaoke bars in a bid to control the epidemic.