AJU PRESS - ASIA NEWS HUB

Journalist

Kim Yeon-jae김연재

ReporterBank of Korea & Market, Macroeconomics

'Kim Yeon-jae is a journalist at AJU Press (AJP's English platform),
covering macroeconomics, international finance, and geopolitics.
He closely tracks central bank monetary policies, global energy supply chains,
and the Korean defense industry. "Peering into the risks behind the euphoria."

Latest by Kim Yeon-jae

Inequality deepens for Korean households on wealth gap and AI rise SEOUL, June 11 (AJP) - South Korea's household inequality is becoming more complex as property-driven wealth gaps combine with renewed income polarization, the Bank of Korea said Thursday. Rising real estate prices have widened wealth gaps between homeowners and non-homeowners, regions and generations. The net wealth Gini coefficient rose to 0.625 in 2025 from 0.584 in 2017, with a higher reading indicating a more unequal distribution. The central bank identified rising property prices as the main driver of the widening wealth gap. Property ownership is concentrated among older households, making intergenerational wealth inequality more entrenched. The trend has weakened the wealth-building ladder for young people. A growing number of high-income young Koreans are unable to move into the upper wealth bracket because they do not own property, a phenomenon similar to the so-called HENRY group, or "High Earners, Not Rich Yet." Income inequality is also showing signs of widening again. The income Gini coefficient edged up to 0.325 in 2024 from 0.323 in 2023, after years of decline supported by redistribution policies. K-shaped growth, marked by strong IT manufacturing and sluggish growth in non-IT sectors, has widened wage gaps across industries. Artificial intelligence could add further pressure by replacing tasks performed by low-income workers and young people at the early stages of their careers. A BOK survey showed that lower-income groups were more likely to believe their jobs could be replaced by AI, while their actual use of AI was lower than that of higher-income groups. Employment data also showed signs of pressure on young people. Youth employment has fallen faster in industries with high exposure to AI since the launch of generative AI, while employment among people in their 50s has increased in those sectors. The BOK described the trend as "seniority-biased technical change." The combined wealth and income divide is lowering the economic standing of young households. The share of households in both the bottom net wealth and income quintiles that were headed by people in their 20s and 30s rose to 15.2 percent in 2025 from 7.9 percent in 2020. Household polarization could hurt productivity and domestic demand. A panel analysis of 120 countries cited by the BOK showed that a 1 percentage point rise in the wealth share of the top 10 percent lowers total factor productivity by 0.16 percent two years later. The concentration of household assets in real estate can reduce the efficiency of resource allocation by keeping capital tied up in unproductive assets rather than innovative companies and new technologies. Higher housing costs could also reduce discretionary spending by young and low-income households, which tend to have a higher propensity to consume. Broader social costs could increase if people believe wealth gaps cannot be overcome through work alone. High housing costs could also weigh on marriage and childbirth among young people. The BOK said traditional income-support policies are not enough to address the problem. It called for policies that encourage household assets to move away from real estate and into more productive sectors, while expanding wealth-building channels for young and non-homeowning households. The central bank also urged policymakers to redesign redistribution systems for the AI era, strengthen job training for workers exposed to technological displacement and broaden the tax base as labor income becomes more vulnerable to automation. 2026-06-11 13:40:49
FOMO stock bet fuels household loans in Korea in May SEOUL, June 11 (AJP) - Bank loans rose sharply in May as South Koreans frantically borrowed out of the fear of missing out (FOMO) on record stock bull and for housing on expectations for rate hikes, central bank data showed Thursday. Bank household loans increased by 6.9 trillion won ($4.52 billion) in May, widening from a 2.1 trillion won gain in April and exceeding the 5.2 trillion won increase recorded a year earlier, according to the Bank of Korea. The sharpest turnaround came from other loans, which include unsecured credit loans, credit lines and stock-backed loans. Other household loans rose by 3.7 trillion won in May after falling by 600 billion won in April, with the BOK citing large-scale stock investment by individuals and seasonal funding demand linked to Family Month. Mortgage lending also increased. Bank mortgage loans rose by 3.2 trillion won, compared with a 2.7 trillion won gain in April, supported by mid- to low-priced housing transactions in the Seoul metropolitan area and demand for interim payments on presold homes. The loan growth came as the stock market extended a steep rally. The KOSPI climbed on optimism over the semiconductor cycle and stronger corporate earnings, hitting a record high of 8,801 on June 2. The index later corrected, led by semiconductor shares, as expectations for U.S. Federal Reserve rate hikes strengthened. Still, as of June 10, the KOSPI remained 17.2 percent above its end-April level. Bond yields have been rising in line with the expectations of a rate hike as early as July on inflationary pressure. The three-year Treasury yield rose to 3.88 percent Wednesday from 3.60 percent at the end of April, while the 10-year yield climbed to 4.27 percent from 3.92 percent over the same period. The BOK said government bond yields were affected by inflation concerns at home and abroad and changing expectations for monetary policy. Corporate funding also showed signs of shifting toward bank loans. Bank lending to companies rose by 10.6 trillion won in May, following a 10.7 trillion won increase in April. Loans to large companies increased by 5.2 trillion won, while lending to small and medium-sized enterprises rose by 5.4 trillion won. The BOK said SME lending remained strong as banks continued to expand corporate credit under their productive finance push, while large companies sought working capital, including funds to redeem corporate bonds. Corporate bond issuance remained weak, with companies recording a net redemption of 1.1 trillion won in May as higher interest rates raised issuance costs and pushed firms toward alternative funding sources such as bank loans. Commercial paper and short-term bonds also shifted to a net redemption of 2.1 trillion won. Deposits at financial institutions rose sharply. Bank deposits increased by 48.8 trillion won in May after falling by 6.8 trillion won in April, helped by short-term funds placed by some large companies and banks' efforts to secure lending resources and manage regulatory ratios. Asset management firms also saw large inflows. Their deposits rose by 86.4 trillion won in May, led by stock funds, which increased by 58.8 trillion won on valuation gains from higher domestic and overseas share prices and continued new investment inflows. 2026-06-11 13:37:04
Korea's job decline exposes weakness beneath chip boom SEOUL, June 11 (AJP) - South Korea’s employment rate fell by the steepest pace in five years as weakness in manufacturing and youth hiring exposed the limited spillover from a recovery increasingly driven by memory chip exports. According to data released Thursday by Ministry of Data and Statistics, the employment rate for people aged 15 and older fell 0.5 percentage point to 63.3 percent, marking the sharpest decline since February 2021. The number of employed people aged 15 and older was tallied at 29.12 million in May, 40,000 short from a year earlier, It marked the first year-on-year decline in employment since December 2024. Manufacturing was at the center of the downturn. The number of manufacturing jobs fell by 140,000 from a year earlier to 4.295 million. Employment in agriculture, forestry and fisheries dropped by 121,000, while professional, scientific and technical services shed 89,000 jobs. Health and social welfare services, a sector reliant on senior and temporary hires, added 212,000 jobs, but the gains were not enough to offset losses in manufacturing, agriculture and higher-value service sectors. Youth employment deteriorated sharply. The number of employed people aged 15 to 29 fell by 255,000 from a year earlier to 3.427 million, while the youth employment rate dropped 2.4 percentage points to 43.8 percent. The youth unemployment rate rose 0.6 percentage point to 7.2 percent. The decline in manufacturing jobs, combined with weakness in professional and technical services, appears to have further narrowed opportunities for young people entering the labor market. The composition of employment also weakened. The economically inactive population increased by 264,000 from a year earlier to 15.986 million. Regular employees declined by 7,000 and temporary workers by 121,000. Instead, the number of daily workers rose by 14,000. The weak labor market data stand in stark contrast to robust headline exports and economic growth. Exports jumped 53.2 percent from a year earlier to $87.75 billion in May, while imports rose 20.8 percent to $60.8 billion, leaving a trade surplus of $26.95 billion. Monthly exports topped $80 billion for a third consecutive month for the first time, setting a fresh record. The divergence highlights the increasingly concentrated nature of South Korea's recovery. While exports continue to reach new highs, much of the growth has been driven by semiconductors and data center-related demand, sectors that generate relatively few jobs compared with traditional manufacturing industries. Exports excluding semiconductors rose 16.4 percent from a year earlier, while exports excluding both semiconductors and computers increased 9.5 percent — far below the 53.2 percent increase in overall exports. Outbound shipments from traditional job-intensive sectors continued to struggle. Automobile exports fell 5.9 percent from a year earlier in May, while steel exports declined 2.1 percent. A Bank of Korea official said at an April 23 briefing that growth in industries excluding semiconductors was estimated at around 0.9 percent, roughly half of the economy's 1.8 percent expansion in the first quarter. The figures suggest that record semiconductor exports mask worsening in much parts of the domestic economy. Semiconductors are highly capital-intensive, limiting the extent to which higher production translates into employment gains. According to the Bank of Korea's Economic Statistics System (ECOS), the semiconductor sector generates about 2.0 jobs per 1 billion won ($656,000) of output, less than half the 4.3 jobs generated by the automobile industry. The weak labor market data added to pressure on already fragile financial markets. The benchmark KOSPI fell more than 2 percent, while the Korean won weakened 3.60 won to 1,528.1 against the U.S. dollar. The yield on three-year government bonds edged up to 3.88 percent as of 11:30 a.m. 2026-06-11 13:29:51
Employment falls for 1st time in 17 months as youth jobs dwindle SEOUL, June 11 (AJP) - South Korea's employment fell for the first time in 17 months in May, largely due to a sharp decline in youth employment and manufacturing jobs, according to data released by the Ministry of Data and Statistics on Thursday. The number of employed people aged 15 and older stood at 29.12 million last month, down 40,000 from a year earlier. Youth employment weakened sharply, with the number of employed people aged 15 to 29 declining by 255,000 to 3.43 million, and their employment rate falling 2.4 percentage points to 43.8 percent. Manufacturing jobs, a key pillar of the country's economy, fell by 140,000 from a year earlier to 4.30 million, resulting in the overall decline in the labor market. Employment in the agriculture, forestry and fisheries sector decreased by 121,000, while professional, scientific and technical services shed 89,000 jobs. 2026-06-11 08:29:34
Korea's defense of won falls short against foreign capital exodus SEOUL, June 10 (AJP) - South Korean authorities this year have been employing every tool in the playbook to bolster the Korean won, dangerously flirting around post-2008 crisis levels — from a $65 billion FX swap arrangement with the National Pension Service and suspected smoothing operations to a rare joint probe into foreign exchange activities at major banks. But so far, all have proved of little avail. Each measure has offered short-term relief, only to wear off with every bout of KOSPI volatility and fresh wave of capital outflows driven by geopolitical risks, tighter global monetary conditions and a growing shift of funds toward U.S. assets. The dollar ended Wednesday at 1,524.2 won, up from 1,512.1 won the previous session, though below Monday's intraday high near 1,560 won. Stock market flows have increasingly dictated the won's direction. Foreign stock selling increases demand for dollars as investors repatriate funds overseas, adding upward pressure on the exchange rate. A weaker won, in turn, raises concerns over currency losses and prompts further reductions in Korean equity exposure, creating a potentially self-reinforcing cycle. Foreign investors sold a net 2.77 trillion won ($1.8 billion) worth of Korean stocks on Wednesday, extending cumulative net selling this month to nearly 30 trillion won and putting outflows on track to surpass May's record 51.5 trillion won. Foreigners have sold a net 144.2 trillion won worth of KOSPI shares this year. During the same period, the won has lost more than 5 percent against the dollar, significantly underperforming both the dollar index, which gained about 1.75 percent, and the Japanese yen, against which the greenback rose roughly 2.2 percent. One emerging catalyst behind the recent acceleration in outflows is the upcoming debut of SpaceX on Nasdaq on Friday. The highly anticipated listing, expected to value the company at around $1.8 trillion, has prompted global investors to reposition capital toward U.S. technology assets, making Korea's highly liquid equity market an attractive source of funds. One of the authorities' key tools has been the foreign exchange swap arrangement with the National Pension Service. The foreign exchange authorities and the pension fund agreed last December to extend their $65 billion FX swap line through the end of 2026. Because large overseas investments by the pension fund can intensify downward pressure on the won, the arrangement allows part of that dollar demand to be absorbed outside the spot market. Still, repeated stabilization efforts appear to be placing pressure on the country's foreign exchange reserves. According to the Bank of Korea, foreign exchange reserves fell from $430.66 billion at the end of November last year, just before the swap line was extended, to $426.99 billion at the end of May, a decline of $3.67 billion over six months. The drop in May alone was notable. Reserves fell by $880 million even as the KOSPI reached record highs during the month. Although the benchmark index climbed above 8,400 on May 27, foreign investors remained net sellers for 16 consecutive trading days from May 7 through the end of the month. The Bank of Korea said the decline in reserves partly reflected market stabilization measures, effectively acknowledging that intervention-related operations contributed to last month's fall. On Wednesday, when the KOSPI tumbled 4.52 percent to close at 7,730.82, foreign investors sold a net 2.77 trillion won worth of shares, extending their selling streak to 23 consecutive trading days. The sustained outflows have continued to pressure the won even as authorities intensify efforts to stabilize financial markets. A foreign exchange dealer at a local commercial bank, who requested anonymity, said authorities appeared determined to defend the currency. "Although it is impossible to officially confirm whether the authorities are conducting direct smoothing operations, the market has clearly observed continued inflows and movements aimed at defending the won's lower bound," he said. Policymakers are also publicly acknowledging rising volatility in financial markets. The Bank of Korea and the Financial Supervisory Service on Wednesday launched a joint inspection of major foreign exchange banks to examine speculative transactions and potential market-disrupting activities. The same day, Deputy Prime Minister and Finance Minister Koo Yun-cheol chaired an expanded macroeconomic, fiscal and financial policy meeting attended by Budget Minister Park Hong-keun, Financial Services Commission Chairman Lee Eog-weon and BOK Governor Shin Hyun-song to review financial-market risks and vulnerabilities. Market participants view the inspection as a sign that authorities have stepped up their defense of the currency, with regulators now scrutinizing actual trading records. So far, policymakers have managed to prevent the won-dollar exchange rate from testing the psychologically important 1,600 level. What they have not achieved is a decisive reversal of the broader weakness that has kept the currency trapped in the 1,500-won range. "Since mid-May, the scale of foreign selling in the stock market has increased sharply to around 3 trillion won per day on average," said Jung Yong-taek, an analyst at IBK Securities. "The current factors are unlikely to be resolved in the short term." For now, Seoul's financial markets remain caught in a vicious cycle in which foreign capital outflows weaken both stocks and the currency, while authorities can slow the slide but struggle to change its direction. 2026-06-10 17:59:24
South Korea as slight favorite over Czech Republic in World Cup group stage: Opta SEOUL, June 10 (AJP) - South Korea is viewed as a slight favorite over the Czech Republic in their first group-stage match on Friday (in Korean time) at the 2026 FIFA World Cup, according to a revised forecast by football statistics firm Opta. Opta said Wednesday that its supercomputer gave South Korea a 42.9 percent chance of beating the Czech Republic in the Group A match. The Czech Republic's chance of victory was estimated at 31.1 percent, while the probability of a draw stood at 26.0 percent. South Korea trails the Czech Republic slightly in their head-to-head record, with one win, two draws and two losses. Their most recent meeting came in June 2016, when South Korea won 2-1 behind goals from Yoon Bit-garam and Suk Hyun-jun. South Korea also ranks higher in FIFA's world rankings, standing at No. 25 compared with the Czech Republic's No. 40. Son Heung-min and Cho Gue-sung are expected to lead South Korea's attack at the tournament, while Ladislav Krejci and Patrik Schick were cited as key players for the Czech Republic's offensive line. Opta also gave South Korea a relatively favorable outlook for the group stage, projecting a 22.4 percent chance of finishing first in Group A and a 28.4 percent chance of finishing second. The team's chances of finishing third and fourth were estimated at 26.8 percent and 22.4 percent, respectively, putting its overall probability of advancing to the round of 32 at 70.1 percent. Host nation Mexico was seen as the strongest contender to top Group A, with a 48.0 percent chance of finishing first. The Czech Republic was given an 18.4 percent chance of winning the group and a 64.2 percent chance of reaching the round of 32, both lower than South Korea's figures. South Korea's broader tournament outlook also improved slightly in Opta's latest projection. Its chances of reaching the round of 16, quarterfinals, semifinals and final were estimated at 33.72 percent, 12.53 percent, 4.05 percent and 1.34 percent, respectively. South Korea's chance of winning the tournament stood at 0.40 percent, up slightly from the previous projection. South Korea will face the Czech Republic in Guadalajara, Mexico, at 11 a.m., Friday, Korea time. 2026-06-10 14:13:10
Korea's cash stimuli program helped merchants but stopped short of aiding economy: BOK SEOUL, June 10 (AJP) -The handouts of consumer coupons by the new Korean government last year aimed to jump-start lethargic consumption boosted revenue of around 2.8 trillion won ($1.8 billion) for small businesses last year, the Bank of Korea said Wednesday while acknowledging short-lived effect from cash benefits on broader economy. The central bank said in its latest study in Issue Note that about 30.9 percent of the 9.1 trillion won distributed through credit cards translated into additional sales at retail stores. Depending on the methodology used, the sales boost was estimated at between 1.4 trillion won and 3.6 trillion won, with the ratio of additional sales to fiscal input ranging from 16.1 percent to 39.8 percent. The consumer coupon program was included in the 2025 supplementary budget to stimulate household consumption and support small merchants. A total of 13.522 trillion won was distributed nationwide through credit cards, local gift certificates and prepaid cards, with credit cards accounting for about 70 percent of the total. The BOK analyzed credit card sales data from six card companies to estimate the impact on eligible merchants and conducted self-reported surveys of coupon recipients to assess the effect on household consumption. Local gift certificates and prepaid cards were excluded from the credit card sales analysis. Average monthly sales at eligible stores rose 2.91 percent more than at non-eligible stores, the BOK said. Under alternative estimation methods, the effect ranged from 1.46 percent to 3.76 percent. The impact was concentrated in the early stages of both the first and second rounds of payments and lasted only briefly. The BOK said the findings showed the coupon program was suited as a short-term policy response when stabilizing livelihood conditions was urgent. By region, the impact was stronger outside the Seoul metropolitan area in both the first round, which included differentiated regional support, and the second round, which did not. The overall effect was largest in non-capital regions, suggesting that coupons may generate a stronger consumption response in areas with weaker spending capacity. By sector, the effect was largest at general merchandise stores, followed by restaurants and leisure goods stores. The result indicates that the sales boost was concentrated in everyday consumption sectors, including food, clothing and optical goods. The effect on household consumption was more limited. The BOK estimated the marginal propensity to consume out of the coupons at 0.20, meaning households increased new spending by about 20,000 won for every 100,000 won received. Spending that would have taken place even without the coupons was excluded from the estimated consumption effect. The marginal propensity to consume tended to be higher among lower-income households. The BOK said the consumption effect could be increased if support targets were set more precisely and differentiated assistance was used together. By item, new consumption was more pronounced in durable goods, semi-durable goods and leisure, while the effect was smaller for necessities such as non-durable goods, education and medical services. The marginal propensity to consume was 0.21 in the first round, slightly higher than 0.18 in the second round. The BOK said the lower second-round effect may have reflected weaker policy visibility or a reduced sense of benefit, as the per-person payment fell to 100,000 won from 150,000 won to 550,000 won in the first round. Overall, the BOK estimated that the consumer coupon program lifted South Korea's gross domestic product growth in 2025 by about 0.12 percentage point. Depending on the methodology, the growth effect ranged from 0.07 percentage point to 0.15 percentage point. The central bank said the policy channel from higher disposable income to actual spending and merchant sales had functioned effectively. It also said income- and region-based differentiated support appeared to have helped boost spending among vulnerable groups and sales outside the capital region. Still, the BOK said similar programs in the future should be designed more precisely in terms of timing, differentiated support and eligible merchants to improve their economic effectiveness. It added that policy efforts are also needed to structurally improve the competitiveness and productivity of self-employed workers and small businesses. 2026-06-10 12:59:52
Korean Inc. scores second best in profitability, but zombie firms hit record high SEOUL, June 10 (AJP) -Korean Inc. scored their second-best in profitability last year largely thanks to staggering margins of chipmakers, while the broad polarization deepened with zombie population hitting their all-time high, central bank study showed Wednesday. According to the preliminary corporate management analysis for 2025 released by the Bank of Korea (BOK), the revenue growth rate for non-financial corporations subject to external audits stood at 2.5 percent last year. That was down 1.7 percentage points from 4.2 percent a year earlier. The headline profitability improved sharply. The operating profit margin rose from 5.4 percent in 2024 to 6.2 percent last year, marking the highest level since 2021, when it stood at 6.8 percent. The pre-tax net profit margin also climbed from 5.2 percent to 6.3 percent. The overall corporate balance sheet also strengthened. The debt-to-equity ratio fell from 103.4 percent to 98.3 percent, and borrowing dependency dropped from 28.4 percent to 27.3 percent. It marked the first time in five years that the average debt ratio fell below 100 percent, since 2020, when it recorded 97.3 percent. Top-line growth slowed across both manufacturing and non-manufacturing sectors. Revenue growth in manufacturing fell from 5.2 percent to 3.2 percent, while non-manufacturing growth dropped from 3.0 percent to 1.6 percent. Within manufacturing, petroleum refining and chemicals suffered notable slumps. Revenue growth for petroleum refining and coke swung from 1.0 percent to negative 7.4 percent, while chemicals fell from 4.0 percent to negative 2.4 percent. The BOK attributed the decline in refining to deteriorating supply-demand conditions and lower oil prices. Chemicals were hit by persistent global oversupply. In the non-manufacturing sector, the construction slump was stark. The construction revenue growth rate deepened its decline from negative 3.2 percent to negative 9.6 percent. The BOK said construction was dragged down by shrinking real estate demand and a prolonged slowdown in housing starts since 2023. By company size, growth weakened across the board. Large companies saw revenue growth slow from 4.4 percent to 2.8 percent, while small- and medium-sized enterprises (SMEs) cooled from 3.2 percent to 1.2 percent. The rebound in profitability was led largely by the semiconductor sector. The manufacturing operating profit margin rose from 5.5 percent to 6.9 percent, while the margin for electronic, visual and communications equipment jumped from 8.8 percent to 15.0 percent. The BOK said rising semiconductor prices and increased sales of high-value-added products for AI servers drove the improvement. However, the sector's revenue growth slowed from 21.6 percent to 15.1 percent, indicating a moderation in growth momentum. Utilities also helped lift non-manufacturing profitability. The operating profit margin for electricity and gas rose from 5.8 percent to 8.3 percent, helped by utility rate adjustments, lower power purchase costs and fiscal normalization efforts. The aggregate improvement did not translate into broader corporate health. Large companies' operating profit margin rose from 5.6 percent to 6.6 percent, while SME margins slipped from 4.8 percent to 4.6 percent. In manufacturing, margins at large firms climbed from 5.7 percent to 7.3 percent. Those at SME manufacturers edged down from 4.7 percent to 4.6 percent, suggesting that semiconductor gains did not spread widely to smaller businesses. A similar divergence was evident in debt-servicing capacity. The overall interest coverage ratio rose from 305.8 percent to 369.8 percent, supported by higher operating margins and lower financing burdens. However, the share of firms with an interest coverage ratio below 100 percent expanded from 38.5 percent to 39.9 percent. An interest coverage ratio below 100 percent means a company's operating profits are insufficient to cover its interest expenses. The BOK said the share was the highest since the current data series began in 2013. The strain was also visible in the distribution of corporate earnings. The proportion of loss-making companies grew from 26.2 percent to 28.2 percent. The share of firms with an interest coverage ratio of 500 percent or higher shrank from 33.1 percent to 32.6 percent. This indicates that strong performances by a handful of large tech firms lifted aggregate averages, even as financial strains on vulnerable businesses worsened amid sluggish domestic demand and elevated interest rates. Cash flows improved marginally as operating activities generated stronger inflows. The cash flow coverage ratio rose from 51.4 percent to 52.8 percent. The preliminary statistics are based on a survey of 34,456 non-financial corporations subject to external audits that filed audit reports as of the end of 2025, excluding certain companies and industries. 2026-06-10 12:53:34
Seoul starts probe on FX banks over won speculation SEOUL, June 10 (AJP) - South Korean financial authorities have launched a joint inspection on suspected speculative activities pressuring the Korean won against major currencies after the U.S. dollar went as high as 1,550 won over the weekend, the Ministry of Economy and Finance on Wednesday. The Bank of Korea and the Financial Supervisory Service will conduct both written reviews and on-site inspections from Wednesday, following an emergency market monitoring meeting held last Sunday. Authorities plan to examine whether speculative trading or suspected market-disrupting activity added to the won's recent weakness. The probe will examine whether foreign exchange banks moved or fixed currency rates to secure unfair profits for themselves or third parties. Authorities suspect that one-sided offshore non-deliverable forward (NDF) transactions may have increased pressure on the domestic currency market. It will also cover trades aimed at disrupting normal market functions or price discovery. Transactions that moved prices against customer orders through large one-way trades at specific times will also be reviewed. The step comes as the exchange rate has swung sharply in recent sessions. During night trading on June 6, the won weakened to 1,561.5 per dollar, marking its lowest level since March 2009. On Tuesday, the won recovered to 1,512.1 per dollar, supported by verbal intervention and currency hedging by the National Pension Service. But volatility has remained high. It reversed course on Wednesday morning, opening weaker at 1,525. Watchdogs said they will take stern action under relevant laws if any illegal activity is found. 2026-06-10 09:49:13
Won gains on NPS hedge; bonds rebound SEOUL, June 09 (AJP) - The South Korean won extended its gains for a second straight day Tuesday after foreign exchange authorities formalized currency hedging measures for the National Pension Service (NPS). The bond market also rebounded for the first time in four sessions, helped by bargain-hunting and reports that the Bank of Japan (BOJ) may keep its government bond purchases at current levels. In the Seoul foreign exchange market, the won closed at 1,512.1 per dollar, up 22.9 won from the previous session. The currency continued to strengthen after turning sharply higher Monday afternoon. The main driver was policy intervention. Foreign exchange authorities said the NPS began currency hedging procedures Monday, a move seen as helping support the won. Expectations of a faster hawkish response from the Bank of Korea (BOK) also aided the rally. Kim Jin-wook, an economist at Citigroup, said Monday that "the BOK could respond faster than expected if market instability expands," raising the possibility of an extraordinary Monetary Policy Committee meeting in June. A strong rebound in stocks further eased risk aversion. The benchmark KOSPI jumped 8.18 percent to close at 8,096.93, recovering most of Monday’s losses. The bond market also snapped a three-session losing streak. The benchmark three-year government bond yield fell 8.4 basis points to 3.856 percent, while the 10-year yield dropped 7.5 basis points to 4.273 percent. Sentiment improved after Japanese media reported that the BOJ may pause its plan to reduce Japanese government bond purchases. The reports raised hopes that the recent slide in global bond prices could ease. Japanese government bond yields are closely watched in Korea because they serve as a key reference point for Asian long-term rates, prompting global investors to adjust Korean Treasury positions in tandem. Market participants also pointed to a shift in foreign investor positioning. "Foreign investors, who had remained net sellers in the morning, turned net buyers of both three-year and 10-year bond futures in the afternoon," a fixed-income market source said on condition of anonymity. The source said the shift likely gave additional support to both bonds and the won. 2026-06-09 18:07:36