Local banks` foreign currency liquidity conditions improve

SEOUL, July 14 (Yonhap) -- South Korean banks' foreign currency liquidity
conditions improved in June as overseas borrowing conditions took a turn for the
better, the financial watchdog said Tuesday.
The foreign currency liquidity ratio of 18 local commercial and state banks came
in at 104.4 percent as of the end of June, up 1.7 percentage points from three
months earlier, according to the Financial Supervisory Service (FSS).
The ratio measures the percentage of a bank's foreign currency assets maturing in
three months or less to its foreign currency debts with the same maturity.
The ratio hovered above 101.7 percent, the level seen before the collapse of U.S.
investment bank Lehman Brothers Holdings Inc. in mid-September, it added. The
watchdog advises local banks to keep the ratio above 85 percent.
"As overseas borrowing conditions improved, local financial firms' foreign
currency liquidity situation also got better," the FSS said.
Domestic banks, saddled with high overseas short-term borrowing, had been
suffering from dollar shortages sparked by the failure of Lehman Brothers.
Squeezed dollar liquidity conditions prompted the local currency to tumble 25.7
percent to the U.S. dollar last year alone.
But the country's market has stabilized noticeably since March as local banks
have been making their own efforts to borrow overseas and the country's trade
surplus is improving.
sooyeon@yna.co.kr
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