South Korea's central bank is to offer US$2 billion to local banks this week, less than its previous supply amount, the central bank said on Monday.

According to the Bank of Korea (BOK), it will offer US$2 billion to local banks through 84-day swap deals on Tuesday out of its US$3 billion loan extension, which would expire this on Thursday.

The money is tapped from a US$30 billion currency swap agreement with the US Federal Reserve, the BOK said.

If local lenders take the full amount, the total value of the swap line tapped by the BOK would be reduced to US$14 billion from the current US$15 billion, it said.

The move comes as the country's trade balance and foreign currency conditions are making progress, with local banks and companies striving to borrow from overseas, according to the BOK.

Since last March, the central bank has been cutting its dollar supply to local banks as foreign currency market shows improvement.

South Korea's foreign exchange reserves made an advance to US$206.34 billion as of end-March, gaining the largest monthly amount in two years.

Holding the sixth-largest amount of foreign currency reserves in the world, the nation also seeks for expanding its existing swap lines with China and Japan to US$30 billion each.

(Xinhua News Agency April 13, 2009)