Making the most aggressive monetary decision in its history, the Bank of Korea cut interest rates by 75 basis points in the overnight session.  This will leave the national seven day repurchase rate at a 4.25 percent benchmark, and hopefully boost what seems to be growing pessimism in Asia’s fourth largest economy.  Additionally, Governor Lee Seong Tae broadened the spectrum of fixed income instruments that the central bank will be allowed to accept as collateral and lowered benchmark rates on loans earmarked for smaller companies.  The decision to lower rates on loans to smaller companies remains vital in this case as domestic exporters have been selling off the won in hopes of hoarding dollars for financing and other operational needs.  As a result, the hope is that the current won slide will be mitigated as we have already seen the currency trade 35 percent lower than the beginning of year at 1424.

Tags: Bank of Korea, Korean Won

This entry was posted on Monday, October 27th, 2008 at 8:50 am and is filed under Economic Indicators, Other Currencies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.