Bank of Korea promises big purchases as markets crater

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Bank of Korea promises big purchases as markets crater

The Bank of Korea on Monday said it will purchase an unspecified amount of local bonds this week to help prevent a possible liquidity crunch facing local brokerages amid a market rout sparked by fears of the new coronavirus outbreak.

The central bank said it will also expand the scope of its purchase program to include bonds issued by public enterprises.

The bank said it would start by purchasing repurchase agreements of with 14- or 28-day maturities.

The bank added that it would expand the purchase program to include certain special bonds from public enterprises in addition to government debt, government-guaranteed bonds, mortgage-backed securities and bank bonds.

The latest repo operations by the bank come after daily crashes in the local stock market, largely caused by the global pandemic.

The bank purchased 1.5 trillion won ($1.18 billion) worth of local bonds last week when the benchmark Korea Composite Stock Price Index plummeted 8.39 percent to reach 1,457.64.

That is the lowest for the index since July 2009.

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