Seoul to temporarily suspend FX stabilization fee to boost supplies: BOK

Banks and other financial institutions will temporarily be exempted from the foreign exchange stabilization levy starting next month as part of measures announced Friday by the Bank of Korea (BOK) to boost the supply of U.S. dollars in the domestic market. For six months beginning the start of January, financial institutions will be exempt from paying the special levy, while the central bank will also pay interest on foreign currency reserve requirements held by financial institutions, according to the BOK. Reserve requirements refer to funds that financial institutions are required to deposit with the central bank as a portion of customer deposits. The foreign exchange stability levy is a system that requires financial institutions to pay fees when they hold foreign currency liabilities above a certain level. Waiving the levy is expected to reduce institutions' foreign currency borrowing costs, which, in turn, may increase the supply of dollars and other foreign currencies in the domestic market, while interest payment on foreign currency reserve requirements may encourage banks to hold