March 31 (UPI) -- South Korea's central bank began offering $8.72 billion in U.S. dollars to local banks, the first installment of a $60 billion currency swap agreement with the United States' Federal Reserve.
The Bank of Korea conducted an online auction on Tuesday, when bids fell short of the central bank's target of supplying $2 billion in seven-day debt and $10 billion in 84-day loans, according to Yonhap. The 84-day loans, $7.92 billion in total, were supplied to 16 banks, while the seven-day debt, a total of $800 million, were acquired by four South Korean financial institutions, according to Newsis.
South Korea has grappled with a critical dollar shortage in the wake of the global coronavirus pandemic. The outbreak has stabilized in the country since February, but the pandemic has also devalued the local currency.
South Korea previously signed a currency swap deal with the United States, in 2008. According to Newsis, the 2008 transaction involved an initial installment of $4 billion, or half the current amount.
The bidders are to receive the dollars on Thursday.
The U.S. and South Korean central banks signed the $60 billion currency swap agreement on March 19. The Korean won, which has been depreciating in value since the outbreak, appreciated to 1,223 won to the dollar on Tuesday in response to the dollar supply.
South Korea's cooperation with the United States on currency swaps is taking place at a time when the two sides have yet to reach an agreement on the issue of defense cost sharing.
South Korean negotiator Jeong Eun-bo said Tuesday Seoul "regrets" the U.S. decision to furlough South Korean employees on U.S. military bases on the peninsula, as military cost sharing negotiations remain at an impasse.
"The decision by the U.S. side to press ahead with the furloughs for our workers as planned does not properly reflect the situation of the negotiations and we think this is regrettable," Jeong said, according to Yonhap.
Jeong also said the two sides are coming closer to an agreement.
The United States has demanded Seoul pay $5 billion annually for 28,500 U.S. troops. Seoul currently pays about $870 million.
The furlough goes into effect on Wednesday.