December 17, 2009 / 2:23 AM / 10 years ago

S.Korea repays Fed emergency fund

SEOUL, Dec 17 (Reuters) - South Korea’s central bank said on Thursday that it has repaid all of an emergency fund from the U.S. Federal Reserve and that the planned expiry of the currency swap facility will have a limited impact on financial markets.

The Bank of Korea called in all of the remaining $450 million in oustanding loans maturing during the day.

“The Fed’s decision not to extend the credit will hardly affect our local markets and can be viewed as a positive signal that international financial markets have stabilised much,” said Ahn Byung-chan, general director of international team at the Bank of Korea.

The U.S. Federal Reserve said on Wednesday that it would shutter most of its temporary liquidity swap arrangement by Feb. 1 as planned. [ID:nTRU002430] [ID:nFEDAHEAD]

Despite the soothing remark from the authorities, the South Korean won extended its decline against the U.S. dollar to the lowest level in more than two weeks.

The Bank of Korea extended up to $16.35 billion in three-month emergency loans to local banks to ease a severe dollar crunch during the global financial crisis, using a $30 billion currency swap facility that it signed with the U.S. Federal Reserve in late October 2008. (Reporting by Seo Eun-kyung; Editing by Chris Lewis)

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