Seoul closely monitors external health management as USD hits new high against KRW
South Korea will closely monitor capital flow volatility and short external debt amid more rapid monetary tightening and global growth uncertainties, though it considers international confidence in Korean fundamentals remains solid, according to the government.
“There remain risk factors such as reduced global liquidity,” Bang Ki-sun, first vice minister of economy and finance, said in an emergency meeting with the vice ministers in in charge of economic affairs to commit to monitoring closely and taking preventive measures if necessary.
The government will propose comprehensive measures to boost exports in August and make efforts to improve the structural health of trade by enhancing the competitiveness of high-tech industries and the efficiency of energy management.
The trade deficit reached record highs as the value of imports exceeded exports. The deficit was approaching $23 billion as of August 10.
The US dollar hit new yearly highs of 1,327 won on Friday afternoon, but the Korean won’s loss against the greenback of 10% on average is not special as the yen lost 14.9% and the euro Also 10.6%, the finance ministry said.
Foreign exchange reserves stood at $438.6 billion at the end of July, up $29.4 billion from the pre-Covid-19 period in February 2020. Reserves were down 5.4% compared to the end of December last year, but the loss was also not so serious compared to other major countries.
Korean banks’ short-term external debt has increased, but they hold enough reserves to repay.
The credit default swap (CDS) premium was 36 basis points on August 17, down from 56 basis points on July 6.
Despite weakening data, international confidence in Korean fundamentals remains intact, the ministry said.
Korea’s current account surplus hit $24.8 in June, down $17 billion from a year ago. The department expects to maintain a surplus for the year, although it is uncertain whether it will hit the $50 billion target.
By Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]