SEOUL– South Korea’s central bank said Monday it has bought an additional 1.53 trillion won (US$1.17 billion) worth of repurchase agreements (repos) as part of efforts to provide liquidity to businesses having a hard time securing necessary funds.
The amount, however, was smaller than the Bank of Korea (BOK)’s plan to buy some 3 trillion won worth of repos earlier in the day, according to the central bank. The smaller buying appears to be due to less-than-expected bidding for the program amid eased concerns over a liquidity crunch.
Monday’s move is part of the BOK’s decision in late October to inject about 6 trillion won through the repo buying scheme.
In mid-November, the BOK pumped 2.5 trillion won into the market through repo buying, the first such action since the scheme was announced.
The BOK usually sells repos to absorb liquidity from the market but it has been buying them to provide liquidity to the market amid worries over a credit crunch for businesses.
South Korea’s corporate bond market has suffered heightened stability in the wake of a Legoland-linked debt default and growing worries over a credit crunch, though concerns have eased recently after a series of government market stabilization steps.
The BOK earlier said that it is ready to expand repo buying in the case that worries mount over a liquidity shortage in the market.
Source: Yonhap News Agency