(Yonhap)

Local financial institutions have been required to hold an adequate amount of foreign currency assets on hand to get over short-term liquidity disruptions.
Currently, the foreign exchange liquidity coverage ratio (LCR) for banks is set at least 80 percent.

The FX LCR is measured as high-quality liquid foreign assets to projected net cash outflows over 30 days.

South Korea said it will also temporarily exempt a levy on local financial firms to ease their burden in obtaining foreign currencies.

The levy is imposed on financial firms to maintain market stability in case the country suffers sudden inflows and outflows of foreign capital.

"South Korea plans to lend hands to the private sector's efforts to secure foreign currencies by easing macro-prudential regulations adopted after the 2008 financial crisis," Finance Minister Hong Nam-ki said during a meeting with economy-related ministers.

The planned measure is the latest in a series of steps to stem market turmoil and provide a buffer against the fallout from the COVID-19 outbreak.

Early this week, the country unveiled a 42 trillion-won aid package to buttress up the stock market, as well as the bond market, which has been pummeled by growing woes over the impact of the new coronavirus on the economy.

Also, South Korea struck a US$60 billion currency swap deal with Washington last week, which will be in place for at least six months. It is the second of its kind since 2008.

In particular, the country's financial authorities raised the cap on foreign currency forward positions for local banks to 50 percent of their equity capital, from the current 40 percent, in an effort to ease a dollar shortage in the capital market.

South Korea, hit by the growing outbreak of COVID-19, is set to implement an extra budget worth 11.7 trillion won to help the economy chug along. The central bank also cut its policy rate by half a percentage point to a record low of 0.75 percent.

The country's stock market has been battered by an extended foreign sell-off, although it rebounded by more than 8 percent Wednesday.

To support local industries from the economic fallout from the new coronavirus, the country plans to increase the employment-retention subsidies to 500 billion won ($403 million) from the current 100 billion won as well, according to the finance minister. (Yonhap)