The Monetary Authority of Singapore (MAS) will draw on its new currency swap line with the United States Federal Reserve to provide up to US$60 billion (S$86 billion) of US dollar funding to local banks.

The swap line was announced last week as part of coordinated central bank actions to alleviate the surge in demand for US dollars from the impact of the coronavirus outbreak.

The MAS said yesterday that the new funding for banks will support more stable US dollar funding conditions in Singapore, and facilitate the lending of greenbacks to businesses here and the region.

It will also contribute to global efforts by central banks to maintain stability and normal functioning of financial markets.

The MAS will lend US dollars obtained from the US central bank to banks here through its new MAS USD Facility, via auctions.

The first auction will take place today with US$10 billion in seven-day funds on offer to help cater to increased end-of-quarter demand for US dollars.

There will be two auctions next Monday, where US$12 billion in seven-day funds and US$8 billion in 84-day funds will be offered. After this, regular weekly auctions will be conducted every Monday.

The MAS said it will continue to maintain a high level of Singapore dollar and US dollar liquidity in the banking system through its daily money market operations.

"The MAS USD Facility complements and reinforces what MAS has been doing to ensure that funding to banks in Singapore remains ample so that they can play their role in providing credit to businesses and individuals," said an MAS statement.