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Economy

South Korea central bank to infuse cash via 'unlimited' repos for first time

SEOUL (REUTERS) – South Korea’s central bank said on Thursday (March 26) it will temporarily offer an unlimited amount of money for three months through repo operations, an unprecedented move to funnel cash to money markets hammered by the coronavirus pandemic.

Repo auctions will be held every week, where a wider range of financial institutions will be able to borrow funds at the repo rate of no higher than 0.85 per cent, the BOK said in a statement.

The BOK also said it would accept a wider range of collateral including notes issued by state-run companies in the repo auctions – where central banks lend money to commercial banks and brokerages who can deposit government debt as collateral.

Thursday’s news follows similar policy moves by central banks around the world as policymakers race to bolster stimulus to tackle the economic and financial impact of the coronavirus.

On Monday, the US Federal Reserve pledged to back purchases of corporate bonds and buy unlimited amounts of Treasury bonds for the first time to ensure credit flows to corporations and local governments.

The BOK too is entering unchartered territory by pledging to offer an ‘unlimited demand’ for liquidity from domestic markets, after slashing interest rates by 50 basis points to 0.75 per cent on March 16 in its largest policy easing since the global financial crisis.

It is also working in tandem with the government, after President Moon Jae-in on Tuesday doubled a planned economic rescue package to 100 trillion won (S$118 billion) to save companies hit by the coronavirus and put a floor under crashing stocks and bond markets.

“Through this (repo operations), we will be supplying enough money to the government’s 100 trillion won rescue package programmes,” the BOK said.

The cost of raising US dollars by swapping the South Korean won surged to the highest since the global financial crisis earlier this month while the spread between corporate bonds and treasury debt has been widening, in a sign of tightening money market conditions.

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World News

Kim Jong Un sister's first official remarks hint at higher status

Kim Yo Jong’s proximity to her brother sparked outside speculation that she may be the No 2 leader in North Korea.

In her first known official statement, the younger sister of North Korean leader Kim Jong Un levelled diatribes and insults at South Korea for raising concerns over her country’s latest live-fire exercises.

Kim Yo Jong’s statement – carried by state media – was the first of its kind and indicated a further elevation of her political status

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She is in charge of propaganda affairs for North Korea and has frequently appeared at her brother’s major public events, including summits with President Donald Trump and other regional leaders.

In the statement issued on Tuesday night, she criticised South Korea’s presidential Blue House for expressing strong concerns over the North’s firing drills and urging it to stop acts that do not help reduce military animosities.

“As far as I know, the South side is also fond of joint military exercises and it is preoccupied with all the disgusting acts like purchasing ultra-modern military hardware,” Kim Yo Jong said.

“They meant they need to get militarily prepared but we should be discouraged from military exercises. Such a gangster-like assertion can never be expected from those with normal way of thinking.”

Describing the Blue House as “a mere child” and “a burned child dreading fire,” she questioned how its words and actions could be “so perfectly foolish in detail”.

Kim Yo Jong did not name liberal South Korean President Moon Jae-in, whom she has met several times.

However, she said: “The South side’s response is so regretful and disappointing but it is somewhat fortunate that it was not a direct statement of the president.”

More artillery drills reported

South Korea’s Unification Ministry, which handles inter-Korean affairs, said on Wednesday it had no specific comment on Kim Yo Jong’s statement.

But spokesman Yoh Sang-key said the two Koreas should maintain mutual respect while working towards establishing lasting peace on the Korean Peninsula.

Earlier on Tuesday, North Korean state media said leader Kim Jong Un supervised a live-fire rocket artillery exercise in an apparent reference to the two suspected short-range ballistic missile launches detected by South Korea’s military on Monday.

On Saturday, North Korea said Kim Jong Un also guided an artillery drill aimed at testing the combat readiness of military units.

The back-to-back firing exercises were an apparent show of force by Kim, who had earlier promised to bolster his nuclear deterrent and warned of “shocking action” over now-stalled nuclear negotiations with Trump.

The latest firing drills were his first weapons tests since late November.

Kim Yo Jong’s statement was issued in her capacity as a first vice-department director of the ruling Workers Party’s Central Committee.

She also serves as an alternate member of the North’s powerful Politburo and a member of the rubber-stamp parliament.

Top propaganda official

South Korean officials and experts say she is virtually the North’s top propaganda official.

Kim Yo Jong’s statement “suggests that her status and influence have been expanded to such an extent as to express her opinions externally and beyond playing a role of assisting Chairman Kim Jong Un on his public activities,” said analyst Cheong Seong-Chang at South Korea’s private Sejong Institute.

Believed to be in her early 30s, Kim Yo Jong took a prominent role at the summits Kim Jong Un has held with Trump, Moon and Chinese President Xi Jinping since North Korea entered nuclear talks in 2018.

During one of the three summits with Moon in 2018, Kim Yo Jong handed her brother a pen when he signed the guestbook, and took his gloves after he shovelled mud on a ceremonial tree and a bouquet of flowers that he had been handed at the border.

Her proximity to her brother during the summit sparked outside speculation that she may be the No 2 in the North after her brother purged potential rivals seen as posing a threat to his family’s rule.

Earlier in 2018, she went to South Korea to attend the opening ceremony of the Pyeongchang Winter Olympics, becoming the first member of the North’s ruling family to visit the South since the end of the 1950-53 Korean War.

At the time, she met Moon and conveyed her brother’s invitation to meet in Pyongyang.

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