South Korea has loosened the cap on the foreign currency forward positions for local banks by 25 percent to encourage financial institutions to supply more dollars amid the coronavirus pandemic.
The Ministry of Economy and Finance announced the move on Wednesday after holding related discussions during a meeting of heads of economy-related ministries on Monday.
Under the move, the cap on the foreign currency forward positions that local banks can hold will be raised to 50 percent of their equity capital from the current 40 percent. The ceiling for foreign banks operating in the country will rise to 250 percent from 200 percent.
The government explained that the measures will help stabilize the currency swap market by inducing more foreign funds.