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BOK buys record repos in 2024 to inject liquidity amid political chaos
South Korea’s central bank bought a record amount of repurchase agreements last year as part of efforts to inject liquidity into the market amid economic difficulties and a political crisis caused by President Yoon Suk Yeol’s martial law declaration, data showed Monday.
The Bank of Korea (BOK) injected 106.1 trillion won (US$72.13 billion) through the repo buying scheme in 2024, which marked the largest yearly figure ever, according to the data compiled by the central bank and submitted to Rep. Chung Il-young of the main opposition Democratic Party (DP).
Of the total, repo operations worth 47.6 trillion won were implemented in December when financial authorities vowed to provide “unlimited liquidity” to the market to minimize the impact of Yoon’s shocking, albeit short-lived, martial law imposition on Dec. 3.
The figure for December is larger than that for the entire year of 2020 at 42.3 trillion won when the country was reeling from the COVID-19 pandemic.
“The data indicated that the martial law incident had greater repercussions for the financial market than the pandemic,” the lawmaker said, calling on the central bank to continue taking all-out efforts to ensure market stability.
Following the martial law declaration, the Korean currency sank to around 1,450 won against the U.S. dollar, the lowest in nearly 16 years, and has since stayed well below that level.
A repurchase agreement is a deal whereby one party sells the other a security at a specified price with a commitment to buy the security back at a later date. The BOK buys repos to provide liquidity and settle the market.
The National Assembly has voted to impeach Yoon pending a final decision by the Constitutional Court, and an extensive probe into the case is under way.
