South Korea's central bank said on Monday it will supply 1.5 trillion won (US$1.1 billion) in liquidity into the financial system this week through longer-dated repurchase agreement.

The Bank of Korea (BOK) said it will hold an auction on Tuesday to purchase the 91-day repurchase agreement deals.

"The BOK expects the considerable amount of the liquidity would be invested in debt instruments like commercial paper," the central bank said in a statement.

A repurchase agreement, the BOK's main method of releasing liquidity into the market, allows one party to sell a security at a specified price with a commitment to buy the security back at a later date.

(Xinhua News Agency January 12, 2009)