S. Korea to step up monitoring of foreign currency liquidity

SEOUL, Sept. 23 (Yonhap) -- South Korea's financial watchdog said Friday it plans to beef up monitoring of foreign currency liquidity conditions and capital flows amid escalating market volatility stemming from lingering economic uncertainties in Europe and the United States.
"We plan to monitor banks' foreign currency conditions and bolster daily monitoring of foreign investors' trading trends and signs of capital outflow," Financial Supervisory Service (FSS) Gov. Kwon Hyouk-se told lawmakers at a parliamentary audit.
Kwon's remarks come a day after the U.S. Federal Reserve's economic outlook and a spate of ratings downgrades of U.S. and Italian lenders pummeled the local financial market.
On Thursday, the benchmark Korea Composite Stock Price Index (KOSPI) slumped 2.9 percent and the local currency plummeted 29.9 won against the U.S. dollar. The cost of insuring South Korea's sovereign debt against default also shot up to a 28-month high.
The financial watchdog plans to induce local banks with large loans from European lenders to diversify their lending sources and extend loan maturities, Kwon said.
The FSS will also seek to reinforce the role of institutional investors and step up risk management on stock investments.
mil@yna.co.kr
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