The Bank of Korea (BOK) said on Tuesday that it has supplied loans worth US$4 billion to local banks, which have been suffering from a foreign currency crunch amid the global financial crisis.

The BOK said that the money came from the US$30 billion currency swap agreement with the United States.

A total of 14 local financial institutions participated in the auction, to bid for US$5.25 billion on offer, said the BOK.

The loans have an annual interest rate of 1.44 percent on average and will mature in 84 days.

With rumors running rampant that local banks may not be able to repay their foreign currency debt due to a dollar shortage, the possibility of a financial crisis has added to market jitters.

South Korea's foreign exchange reserves bounced back last December from its eight-month consecutive decline as the government injected part of their dollars to relieve the deepening credit squeeze.

The country's foreign reserves stood at US$201.74 billion as of the end of January.

(Xinhua News Agency February 24, 2009)