https://shinjukuacc.com/20181220-02
2018/12/20
CanTrustKorea'sForeignExchangeReservesTrueOrFal1
CanTrustKorea'sForeignExchangeReservesTrueOrFal2
CanTrustKorea'sForeignExchangeReservesTrueOrFal3
CanTrustKorea'sForeignExchangeReservesTrueOrFal4
Chuo Daily "more than $ 120 billion"
This website has been introduced several times in the past,
but in March this year, an article like this was published
in the Korean media "Chuo Nippo" (Japanese version).
Korea, the possibility of a currency crisis at the time of US interest rate hike ... currency swap with Japan and the US necessary (from March 19 , 2018 , 13:47 )
According to the Chuo Daily,
the Korea Economic Research Institute announced on March 18
this year that Korea will lose
about $ 120 billion in foreign currency holdings
if it falls into a currency crisis .
The article alone is not good enough for this $ 120 billion argument.
However,
assuming that South Korea's foreign debt denominated
in foreign currencies is $ 280 billion and its foreign exchange reserve
is only $ 160 billion , Korea's foreign exchange deficit is $ 120 billion,
which is the figure of “$ 120 billion” in this article.
And match with that right.
In addition, the same report
"The shortfall will be further increased considering
the capital outflow of domestic residents
and the local repayment of overseas Korean companies,
as well as the short-term repayment
and foreign exchange intervention
by the Bank of Korea for market stabilization."
As stated, etc., the impact of a real currency crisis can not be predicted .
Complementary means of foreign exchange reserve
are currency swap and CMIM
Because of this situation, Korea may need a mechanism
such as currency swap.
If you think so,
it may be natural for the Bank of Korea President to be delighted
with the ups and downs of the $ 10 billion currency swap with Switzerland.
However,
the swap line that Korea holds with foreign countries is less than $ 30 billion
in dollar conversion with four countries
such as Australia and Switzerland ( Chart 7 ),
and Malaysia and Indonesia
If you exchange the currency with the dollar,
you may even cause a collapse of the currency of the other country .
Chart 7 Currency swaps held by Korea with foreign countries
|
Destination country and amount |
US dollar equivalent |
Korea offer |
|---|---|---|
|
Australia (A $ 10 billion) |
About $ 7.181 billion |
9 trillion won |
|
Switzerland (CHF 10 billion) |
About $ 10.76 billion |
11.2 trillion won |
|
Malaysia ( 15 billion ringgit) |
About $ 3.57 billion |
5 trillion won |
|
Indonesia (Rp 115 trillion) |
About $ 79.3 billion |
11 trillion won |
|
total |
About $ 287.64 billion |
36.2 trillion won |
([Source] Author created in reference to websites
of central banks of each country.
The exchange rate is as of 2018/12/18 )
In addition to these currency swaps,
the Bank of Korea has also entered into currency swaps with China and Canada
It is said that (or it is doing extension negotiations) etc. This is an error.
In addition to the swaps shown in Figure 7,
the currency swap agreements that Korea claims
to “ hold ” are as shown in Figure 8 .
Chart 8 Swaps other than currency swaps
|
Other countries and amounts |
US dollar equivalent |
Remarks |
|---|---|---|
|
China ( 360 billion RMB) |
About $ 503.4 billion |
It expired on October 10 last year, The Chinese side has not said that it " extended " |
|
Canada |
Limit amount not set |
Swap with Canada is not a currency swap Currency swap |
|
CMIM |
$ 38.4 billion |
Do not activate the IMF delink clause The withdrawal limit is $ 11.52 billion |
([Source] author creation)
In other words,
among the three swaps shown in Figure 8,
the delinking limit ( $ 11.52 billion )
based on the Chiang Mai Initiative Multilateralization Agreement ( CMIM )
is practically useful during the crisis.
That is,
if you consider Table 7 and Table 8 together, if a currency crisis strikes Korea,
A $ 10 billion with Australia ( approximately $ 7.181 billion )
CHF 10 billion with Switzerland ( about $ 10.76 billion )
CMIM Delink Limit $ 11.52 billion
( About $ 28.8 billion )
can be used as a means to save Korea from the crisis,
but again, compared to
" at least $ 120 billion in foreign currency shortages ",
To be honest, it's "like trying to empty the ocean with a thimble".
Can you hear the "Japan-Korea swap"
next year?
This year,
Japan entered into a “yen / yuan” exchange swap with China,
up to ¥ 3.4 trillion and ¥ 200 billion.
It is also true that there was an unfounded belief that
the Korean side would have concluded
that it would conclude a currency swap with Korea
as it has just concluded a currency swap with China (* original mom).
I do not want to think that the current Abe administration
will provide a Japan-Korea currency swap agreement to Korea,
which has made Japan angry and irritated,
such as the Korean Workers Judgment and the Dissolution
of the Comfort Women Foundation, but the end of the year is over
It is also time to run out of funds,
so perhaps the Korean side may have such news coverage again.
However,
if it is true that in the first place it owns $ 400 billion
of foreign exchange reserves,
such countries will be provided with a Japan-Korea currency swap agreement
from foreign exchange reserves,
which is the common property of Japanese national tigers.
There is no need to do it.
Also,
if $ 400 billion of foreign exchange reserves are lie,
I think that it may be outrageous
( Inexcusable .. without an excuse ),
such as providing swaps to insincere countries
that would lie in basic statistics . is.
Both Japan and the EU regularly use dollar swaps with the US.
Swaps = Because of the currency crisis,
it is a six central bank currency swap agreement
that is often talked about on a major premise or principle,
but Japan was also rarely used at first.
However,
Japan has been actively using it since the yen depreciated in June 2016 .
As of January 2017 , for use (Jan. 4 ),
the Bank of Japan has withdrawn $ 1.2 billion, the largest ever,
with a maturity of 7 days.
(Europe matures $ 4.3 billion on 21 December )
As of 2018 (as of December 5 ),
Japan is currently using $ 1 million with an interest rate of 2.71 %,
with a maturity of 7 days.
As of December 5 , the EU has $ 194 million in maturity,
with a new $ 119 million in seven- day maturity,
with a 2.7 % interest rate.
The details of the purpose of use are unknown,
but it is said that Japan and Europe understand the purpose
of the agreement (the intention of the United States)
and are trying to avoid the exchange war
with the US by using swaps regularly according to the market price .
It is guessed.
I think that these efforts under the water lead to trust with
the counterparts of the Federal Reserve Bank,
who will serve as a basis for diplomacy,
and eventually to national interests.
Korea , on the other hand,
bothered officials of the Federal Reserve Bank of the United States
with a fraudulent exchange operation ,
and felt that it would not know the diplomacy,
or that there would be no sense
that demand for a US-Korea swap would be a request. You
Japan,
the United States, the euro area, the central banks
of six countries / regions, Canada, the United Kingdom, and Switzerland,
have signed unlimited exchange and unlimited currency exchange swap
( bilater alliquidity swap )
agreements. We can see that the ECB has raised $ 119 million
from the FedNY Fed
( Https://apps.newyorkfed.org/markets/autorates/fxswap ).
By the way, although the ECB draws out currency swaps frequently
for the US dollar, among financial market participants,
the dollar shortage of euro area banks has been pointed out for a long time,
and from the fact that the fiscal year will end soon.
Japanese financial institutions also need dollar funding.
Due to the Fed's rate hike today,
the balance on swaps will probably grow further towards the end of the month,
but this is a problem of private financial institution funding
and is not something that the authorities use for currency manipulation. .
As you may know,
in the case of Japan,
the Bank of Japan website provides an overview
of dollar-funded operations .
( Https://www.boj.or.jp/mopo/measures/mkt_ope/ope_h/opetori13.htm/ )