BOK floats more fresh bills ahead of extended Lunar New Year holiday

Seoul:  The Bank of Korea (BOK) said on Friday it has issued a greater value of fresh banknotes for this year’s Lunar New Year holiday than a year earlier.

The central bank supplied 5.06 trillion won (US$3.89 billion) worth of fresh banknotes to banks and other financial institutions for 10 days through Friday, up 8.8 percent from the amount delivered for the holiday season a year earlier, according to the BOK, reports Yonhap news agency.

The growth came as the holiday season was extended to six days from three after the government designated Monday as a temporary national holiday. This year’s Lunar New Year falls on Wednesday.

Demand for fresh bills rises during the holiday season as South Korea has a tradition of elders offering cash gifts to younger ones after receiving deep bows for the first greeting of a new year.

Meanwhile, banks’ loan rate fell in December, as the central bank delivered back-to-back rate cuts to prop up the economy, central bank data showed on Friday.

The average lending rate of banks applied to new loans last month came to 4.64 per cent, down 0.12 percentage point from a month earlier, according to the data from the Bank of Korea (BOK).

Banks’ lending rate for corporate loans shed 0.14 percentage point to 4.62 percent in December.

Their lending rate on household loans also inched down 0.07 percentage point to 4.72 per cent on average in December, marking the first fall in five months amid tighter lending regulations to curb rising household debts and apartment prices.

The rate that banks pay for deposits also fell 0.14 percentage point to 3.21 percent.

The spread on banks’ lending and deposit rates, accordingly, widened to 1.43 percentage points last month from 1.41 percentage points in November, according to the data.

In November, the BOK slashed its benchmark interest rate by 25 basis points to 3 percent following its first pivot in more than three years a month earlier.

During the December meeting, the central bank kept the rate unchanged, despite a gloomy growth prospect, in an effort to support the weak local currency amid heightened volatility amid political chaos.

–IANS