SEJONG -- South Korea plans to comprehensively examine its rules on foreign exchange trading as it seeks to ensure dollar liquidity amid lingering uncertainties in global markets over the coronavirus pandemic, Vice Finance Minister Kim Yong-beom said Thursday.

Measures to help banks inject more dollars into local markets, including an eased rule on the foreign exchange liquidity coverage ratio (LCR), will be put into place for the time being, Kim said during a meeting with senior officials from the Bank of Korea (BOK) and financial regulators.

In a bid to supply more dollars to local markets, the government eased the LCR rule in March. The LCR ratio for banks was relaxed to 70 percent from 80 percent.

The BOK also signed a new dollar swap deal worth $60 billion with the US Federal Reserve in March.

Helped by the swap deal and other stabilization measures, dollar liquidity in local financial markets has "significantly improved," Kim said.

South Korea's short-term external debt increased by $14 billion on-quarter in the first quarter, while its long term external debt gained $4.8 billion, according to the BOK.

The ratio of its short-term external debt to reserve assets jumped to 37.1 percent, compared with 32.9 percent at end-2019.

Kim said a rise in short-term external debt was necessary as the government sought to prevent foreign exchange market panic from spreading to other financial markets. (Yonhap)