The Bank of Korea lowered the interest rate on its support fund, which has been extended to the domestic banks before the currency crisis for the purpose of supporting purchase of export bills. The interest rate was lowered from LIBOR+4% to LIBOR+2% on Thursday, 22nd of April.
The spread of the fund was LIBOR flat before the currency crisis, but during the crisis a steep raise up to LIBOR+4% was inevitable as penalty interest rate on BOK's emergency support fund went up to LIBOR+15%.
Lowering the spread of BOK support fund was intended to match with recent favorable conditions of domestic banks' foreign liquidity situation and enhanced sovereign credit rating. Korea's 7 major banks' average borrowing cost of short term money from foreign banks has been lowered from LIBOR+3.27% in December, 1998 to LIBOR+2.12% in March, 1999, and more recently to LIBOR+2.07% in the first half of April.