South Korea on Sunday announced a comprehensive rescue package worth about $130bn (£75bn, €97bn) for its banks and companies suffering from a foreign currency liquidity crunch.

It joined some European countries, Hong Kong and Australia in providing state guarantees to bank debts as dollar shortages have caused the local currency to lose one-third of its value this year and prompted Standard & Poor’s, the credit rating agency, to put seven Korean banks on the negative watch list.