Korea — Currency Swap Lines

 

 

 

 

 

 

 

 

11/21

 

We expect KRW to strengthen further but cannot rule out market volatility — Improvement of ST external debt position, record high foreign reserves, and current account surplus will likely support KRW.

Nevertheless, we believe the increase in mobile portion of foreigners’ portfolio investment in the short run remains the main downside risk to FX market stability.

However, market volatility in case of a risky situation might not be as high as we had seen in previous crises because of 1) significantly reduced ST external debt, 2) better economic fundamentals including improved country credit ratings, 3) macro prudential measures in effect, and 4) expansion of currency swap lines.

 

 

 

 Korea.Currency Swap Lines.pdf