AJU PRESS ASIA FIRST NEWS AGENCY

Journalist

Kim Yeon-jae
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
  • South Korea as slight favorite over Czech Republic in World Cup group stage: Opta
    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
  • Koreas cash stimuli program helped merchants but stopped short of aiding economy: BOK
    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
    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 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
    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
  • FSS to launch probe as won volatility deepens
    FSS to launch probe as won volatility deepens SEOUL, June 9 (AJP) - The Financial Supervisory Service (FSS) will launch a joint inspection with the Bank of Korea (BOK) to crack down on speculative currency trading and other market-disrupting activities, as they step up warnings to banks after the won briefly weakened past 1,560 per dollar earlier this week. The South Korean currency later pared losses following repeated verbal intervention by financial authorities, but officials remain on alert as expectations of further U.S. rate hikes and geopolitical uncertainty continue to fuel sharp swings in the foreign exchange market. The FSS held an FX stabilization meeting Tuesday with treasury executives from major commercial banks and foreign bank branches, following a broader interagency meeting on the foreign exchange market a day earlier. The regulator said it will work with the central bank to examine whether recent market volatility and won weakness have been used for speculative transactions or other activities that distort market prices. Foreign bank branches with large positions in non-deliverable forwards (NDFs) are expected to be among the first targets of the inspections. FSS' senior vice governor Kim Sung-uk urged banks to comply with foreign exchange trading rules and strengthen internal controls against market-disrupting behavior. The FSS also told banks to avoid aggressive marketing campaigns or excessive competition to attract dollar deposits at a time of heightened exchange-rate volatility. Banks were also asked to give clearer guidance to consumers on potential foreign exchange losses. The regulator specifically called for stronger cooperation to ensure offshore NDF trading does not add to volatility or one-way bets in the domestic foreign exchange market. The FSS will temporarily tighten oversight of major banks' foreign exchange positions by shortening the review cycle from monthly to weekly or even daily checks. At the same time, the regulator will extend by six months, through the end of this year, a grace period for supervisory measures tied to advanced foreign currency liquidity stress tests. Moon Ji-sung, deputy minister for international affairs at the Ministry of Economy and Finance, also reaffirmed that authorities will respond sternly to speculative trading that undermines market order. The FSS also plans to call in other major financial sectors, including securities firms and insurers, to review risk controls related to overseas investment marketing, dollar-denominated insurance products and foreign exchange volatility. 2026-06-09 18:02:02
  • Koreas Q1 GDP strongest in more than 5 yrs, nominal growth 50-yr high
    Korea's Q1 GDP strongest in more than 5 yrs, nominal growth 50-yr high *Updated with additional data, comments, and market response SEOUL, June 09 (AJP) - South Korea's economy turned out strongest three-month performance in more than five years in the quarter ended March with nominal growth at a 50-year high, according to the finalized first-quarter figure, but the bigger surprise came from income — up record 9.2 percent — as booming chip prices amplified the gains from the AI-driven semiconductor boom. Real gross domestic product expanded 1.8 percent from the previous quarter in the January-March period, according to the Bank of Korea on Tuesday. Real gross national income, a broader measure of purchasing power, jumped 9.2 percent over the same period, more than five times the pace of GDP growth and the strongest on record. The data further underlined how the global race to build artificial intelligence infrastructure is reshaping South Korea's economy, with soaring semiconductor prices boosting national income far faster than production itself. The economy grew 3.8 percent from a year earlier, up from a preliminary estimate of 3.6 percent released in April and marking the fastest annual expansion since the first quarter of 2021. The quarterly growth rate was the strongest since the third quarter of 2020, when the economy expanded 2.3 percent. The upward revision reflected newly available data for the final month of the quarter, which showed stronger facilities investment and private consumption than initially estimated. Facilities investment was revised upward by 1.8 percentage points from the advance estimate, while private consumption was raised by 0.1 percentage point. The gap between GDP and GNI reflected improved terms of trade and rising income earned abroad. Real net factor income from overseas climbed to 11.6 trillion won ($7.56 billion) in the first quarter from 8.2 trillion won in the previous quarter, while higher semiconductor export prices boosted the purchasing power of income generated from the same volume of exports. A key factor behind the surge was real gross domestic income (GDI), which measures the real purchasing power generated from domestic production. While GDP shows how much the economy produced, GDI shows how much real income that production created after changes in export and import prices. Real GDI rose 8.7 percent on quarter and 13.2 percent from a year earlier. "Real GDP shows the volume of goods and services produced by a country, while real GDI shows the real purchasing power of income," Kim Hwa-yong, director general of the BOK's national accounts department, said during a briefing. "Even if the same volume is exported, higher export prices and lower import prices increase the resources available for consumption and investment." Kim compared the economy to a semiconductor company. "GDP would show how many chips were produced, while GDI would reflect how much income was actually earned from selling them," he said. He added that higher export prices and lower raw material costs would push up real GDI. The strong data supported the Korean capital markets after suffering one of the worst Black Monday sessions. Yields on both the three-year and 10-year government bonds fell more than 4 basis points in morning trading, while the benchmark KOSPI rose more than 3 percent. The U.S. dollar, which had climbed above 1,550 won, retreated sharply to 1,516.70 won. Korea's broad economic performance in the first quarter was literally defined by semiconductors. The central bank said information and communications technology industries contributed a record 19.9 percent of overall economic growth during the quarter, fueled by surging demand for AI-related chips and related investment. Manufacturing output rose 3.9 percent from the previous quarter, led by computers, electronics and optical products. Production of computers, electronics and optical products jumped 12.5 percent, while ICT manufacturing surged 15.4 percent. In contrast, non-ICT manufacturing contracted 0.9 percent, highlighting the widening gap between semiconductor-related industries and the rest of the economy. The divergence points to an increasingly uneven recovery in which a handful of AI-linked industries are driving growth while broader manufacturing remains comparatively subdued. Exports rose 5.9 percent from the previous quarter, led by semiconductors and other IT products, while imports increased 3.9 percent on stronger purchases of machinery, equipment and automobiles. Facilities investment jumped 6.6 percent, reversing a decline in the previous quarter as companies stepped up spending on machinery and transportation equipment. Private consumption rose 0.6 percent as spending increased on both goods and services, including clothing and finance-related services. Construction investment increased 1.4 percent, snapping a prolonged downturn as both building construction and civil engineering projects improved. Construction output itself rose 2.2 percent from the previous quarter, the first meaningful rebound after a string of quarterly declines, although the sector remained 3.9 percent smaller than a year earlier. Government consumption fell 0.4 percent, mainly due to lower health insurance benefit payments. On the production side, services expanded a modest 0.6 percent, supported by wholesale and retail trade, accommodation and food services, and finance and insurance. Financial and insurance activities rose 2.4 percent, reflecting strength in financial investment institutions and related services, while transport and information and communications services contracted. The semiconductor boom also generated a sharp increase in corporate earnings. Nominal GDP expanded 10.5 percent from the previous quarter and 17.1 percent from a year earlier, while nominal GNI increased 11.0 percent quarter-on-quarter and 17.1 percent year-on-year. Employee compensation rose 4.0 percent from the previous quarter, but total operating surplus, a broad measure of corporate profits, surged 17.0 percent, indicating that much of the windfall accrued to companies rather than households. The GDP deflator climbed 12.9 percent from a year earlier. Kim cautioned against interpreting the surge in nominal GDP as a sign of runaway inflation. "The expansion in nominal GDP growth was not due to a surge in domestic prices, but was driven by higher export prices centered on semiconductors," Kim said. "It is different in nature from the periods in the 1970s and 1980s, when nominal growth rose because of cost-push inflation." The income surge also transformed the nation's saving and investment profile. Korea's gross saving rate rose to 41.7 percent in the first quarter from 36.0 percent in the previous quarter, while the gross domestic investment ratio fell to 25.3 percent from 28.2 percent. The household net saving rate, however, slipped to 8.8 percent from 9.1 percent, as high interest rates and a weaker won reduced room for savings. 2026-06-09 11:55:26
  • Koreas Q1 GDP strongest since Q3 2020 as chip sector drives one-fifth of growth
    Korea's Q1 GDP strongest since Q3 2020 as chip sector drives one-fifth of growth SEOUL, June 09 (AJP) - South Korea's economy expanded at its fastest pace in more than four years in the first quarter, driven by a semiconductor-led investment and export boom that drove near one-fifth of the growth, central bank data showed Tuesday. Real gross domestic product (GDP) grew 1.8 percent from the previous quarter and 3.8 percent from a year earlier in the January-March period, according to the Bank of Korea's final estimate. The figures were revised up from preliminary growth rates of 1.7 percent quarter-on-quarter and 3.6 percent year-on-year released in April. The quarterly expansion was the strongest since the fourth quarter of 2021, when the economy also grew 1.8 percent, while the annual growth rate marked the fastest pace since the 4.1 percent recorded in the third quarter of 2020. The upward revision reflected newly available data for the final month of the quarter, which showed stronger facilities investment and private consumption than initially estimated. The data underscored the outsized role of Korea's semiconductor sector in the current expansion. Information technology industries contributed a record 19.9 percent of overall economic growth, fueled by booming demand for artificial intelligence-related chips and related investment. Manufacturing output rose 3.9 percent from the previous quarter, driven by computers, electronics and optical products. ICT manufacturing output surged 15.4 percent, while non-ICT manufacturing contracted 0.9 percent, highlighting the widening gap between semiconductor-related industries and the rest of the industrial sector. On the expenditure side, facilities investment jumped 6.6 percent from the previous quarter, reversing a decline in the preceding period as companies expanded spending on machinery and transportation equipment. Exports rose 5.9 percent, led by semiconductors and other IT products, while imports increased 3.9 percent on stronger purchases of machinery, equipment and automobiles. Private consumption grew 0.6 percent as spending on both goods and services increased. Construction investment rose 1.4 percent, snapping a string of quarterly declines, while government consumption fell 0.4 percent due largely to lower health insurance benefit payments. Real gross national income (GNI), a broader measure of national purchasing power, surged 9.2 percent from the previous quarter, far outpacing GDP growth and accelerating from a 1.8 percent increase in the fourth quarter, as a weak won and soaring chip prices improved South Korea's terms of trade while lifting income earned from exports and overseas investments Real net factor income from abroad rose to 11.6 trillion won ($7.56 billion) in the first quarter from 8.2 trillion won in the previous quarter. Nominal GDP expanded 10.5 percent from the previous quarter and 17.1 percent from a year earlier, while nominal GNI rose 11.0 percent on quarter. The GDP deflator climbed 12.9 percent from a year earlier, reflecting higher export prices and stronger corporate earnings. 2026-06-09 09:54:50
  • Won recovers after verbal intervention while bond sell-off deepens
    Won recovers after verbal intervention while bond sell-off deepens SEOUL, June 8 (AJP) - The South Korean won slightly recovered on Monday after a series of verbal warnings from financial authorities, which prompted traders to pull back from their dollar bets. There was also speculation that authorities may have directly intervened in the market. In Seoul, the won closed at 1,548.2 per dollar after opening at 1,555.2 and briefly rising to 1,560 before reversing sharply in morning trade. The turnaround was largely attributed to policy intervention. Yun Kyung-soo, director general of the international department at the Bank of Korea (BOK), and Lee Hyung-ryul, director general of the international finance bureau at the Ministry of Economy and Finance, issued a joint statement, warning that authorities will "never tolerate excessive volatility and one-way herd behavior decoupled from economic fundamentals and will respond strongly." The statement followed two emergency meetings held on last Thursday and Sunday by top economic and financial policymakers including Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol and BOK governor Shin Hyun-song. The Sunday meeting marked the first weekend market-monitoring meeting in about a year and a half since Dec. 8, 2024, when authorities met in the aftermath of disgraced ex-President Yoon Suk Yeol's botched martial law debacle. The unusually strong warning appeared to gain traction after earlier verbal interventions failed to calm the volatile currency market. Market participants also raised the possibility that authorities may have supplied dollar liquidity through smoothing operations, noting that the exchange rate had already started to retreat from its intraday high about an hour before the official statement was released. "Direct smoothing operations cannot be officially confirmed, but we are seeing tangible moves to cushion the won," an FX trader said on condition of anonymity. Despite the won's recovery, the bond market extended its selloff, as investors grew more convinced that persistent currency pressure could force BOK to keep a hawkish policy stance. The debt market came under heavier pressure as the benchmark three-year government bond yield rose 5.8 basis points to 3.940 percent, while the 10-year yield jumped 9.4 basis points to 4.348 percent, with both reaching their highest levels in about two years and seven months since November 2023. The bond selloff deepened as investors interpreted the authorities' defense of the won as a sign that currency weakness has become a more urgent policy concern. That added to expectations that the BOK will maintain a hawkish stance, or even raise rates, if exchange-rate volatility continues to threaten inflation and financial stability. Analysts said downward pressure on bond prices is likely to persist until the market sees a clearer policy response from the central bank. "Expectations that the BOK will raise the benchmark rate to around 3 percent, or possibly as high as 3.25 percent this year, are now being treated almost as a foregone conclusion," said Park Ju-noo, an analyst at Hana Securities. "Investors need to prepare for a scenario in which the three-year yield breaks above the 4 percent threshold." 2026-06-08 17:34:56
  • Fear of rate hikes drives corporate lending surge in Q1
    Fear of rate hikes drives corporate lending surge in Q1 SEOUL, June 8 (AJP) - Corporate loans in South Korea grew the most since the third quarter of 2022, as companies increased borrowing in the first three months of this year, according to data released by the Bank of Korea (BOK) on Monday. Outstanding industrial loans by deposit-taking institutions stood at 2,061.8 trillion won (US$1.33 trillion) at the end of March, up 35.6 trillion won from the previous quarter. The increase widened sharply from an 8.5 trillion won gain in the fourth quarter. The central bank cited seasonal factors, productive finance, and renewed credit-line borrowing all contributed to the increase, but the widespread rise suggested stronger demand for funds ahead of a potential interest rate hike by the BOK. By industry, loans to manufacturers rose 11.1 trillion won, compared with a 1.2 trillion won increase in the previous quarter. Loans to service companies increased by 24 trillion won, up from a 9.2 trillion won gain, while construction loans rose by 400 billion won, turning positive for the first time in seven quarters. In particular, working-capital loans showed the sharpest increase as they jumped by 26.2 trillion won in the first quarter, far above the previous quarter's 1.9 trillion won increase. Facility loans also rose by 9.4 trillion won. "The expansion in working-capital loans was driven partly by the re-extension of credit lines that companies had temporarily repaid at the end of last year to manage financial ratios," said Lee Hye-young, an BOK official. "Facility loans in both manufacturing and services also saw faster growth," she added. Lee also said increased corporate lending by financial institutions under the government's productive finance drive contributed to the rise. Since late last year, the government has promoted productive finance as a key policy goal, seeking to redirect capital away from real estate and household lending toward corporate investment and regional development. By lender type, loans by deposit banks increased by 25 trillion won, compared with a 9.6 trillion won gain in the previous quarter. Loans by non-bank deposit-taking institutions rose by 10.6 trillion won, reversing a 1.1 trillion won decline. Among deposit bank loans, lending to large companies increased by 12.7 trillion won, while loans to small and medium-sized enterprises rose by 11.6 trillion won. Within the service sector, loans to financial and insurance companies increased by 9.8 trillion won, while loans to wholesale and retail businesses rose by 4.9 trillion won. Faster loan growth could become a burden if it overlaps with monetary tightening. With companies already increasing debt, higher benchmark and market rates could quickly lift interest expenses. The pressure would be especially direct for working capital, or short-term funds used for wages, interest payments and raw material purchases. Construction and non-bank lending also remain risk points. Higher rates could add refinancing pressure on weaker developers and prompt non-bank lenders to tighten standards if bad-loan risks rise. The BOK said the latest loan increase remains manageable. "There have been much larger increases in the past, so in absolute terms, the current level does not appear excessively large," Lee said, asked whether it could raise credit risks. 2026-06-08 15:14:15