The Bank of Korea (BOK) said Monday it will deliver an additional $1.26 billion to local banks under its currency swap deal with the US Fed in a move to help stabilize the local foreign exchange market.

The BOK held its fifth online auction to provide up to $4 billion.

Bids undershot the target amount, possibly indicating the stabilization of the local market, the BOK noted.

"Considering that bids fell short of those of last week (at $2.12 billion), the recent drop in the London Interbank Offered Rate (LIBOR) and a rise in the swap rate suggest that market liquidity continues to be maintained at adequate levels," it said in a released statement.

The BOK has so far extended some $17 billion to local banks using its currency swap line with the US.

The latest amount sold will be delivered Wednesday.

The Korean won plunged to a decade low of 1,285.70 won to the greenback in mid-March, compared with 1,158.10 won on Jan. 20, the day South Korea reported its first confirmed case of COVID-19.

The local currency was trading at 1,231.8 won per dollar as of 11:20 a.m.

South Korea currently has bilateral currency swap arrangements with nine countries, including Canada, China and New Zealand, worth over $190 billion in total. (Yonhap)