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

World Cup 26: Europe sweeps, Asia holds ground, Messi lifts South America SEOUL, June 17 (AJP) - Europe restored order at the 2026 FIFA World Cup on Tuesday local time, or Wednesday in Korea, as France, Norway and Austria all won their opening matches while Asia’s unbeaten start came to an end. Argentina also gave South America its first win of the tournament, with Lionel Messi delivering a record-tying hat trick in a victory over Algeria. The day marked a sharp turn from the early group-stage pattern, when Asian teams had gone unbeaten and South American sides had failed to win. France opened Group I with a 3-1 win over Senegal at New York/New Jersey Stadium in East Rutherford, New Jersey. The victory allowed France, World Cup finalists in 2018 and 2022, to protect their status as one of Europe’s strongest sides against the recent Africa Cup of Nations runners-up. Senegal were aggressive in the first half and created several dangerous moments, but France took control after the break. Kylian Mbappe opened the scoring in the 66th minute after being set up by Michael Olise. Bradley Barcola doubled France’s lead in the 82nd minute, only two minutes after coming on as a substitute. Ibrahim Mbaye pulled one back for Senegal in stoppage time, but Mbappe struck again moments later with a long-range finish to seal the win. The brace underlined why France remain one of the tournament favorites. Norway followed with an even more emphatic result, beating Iraq 4-1 at Boston Stadium in Foxborough, Massachusetts. It was Norway’s first World Cup match in 28 years, and Erling Haaland made his tournament debut count with two goals. Haaland scored the opener in the 29th minute, sliding in to finish a cross from David Moller Wolfe with his heel. Iraq briefly fought back when Aymen Hussein equalized nine minutes later, giving the team a moment of hope in its first World Cup appearance since 1986. But Haaland restored Norway’s lead before halftime after pouncing on a poor back pass and beating goalkeeper Jalal Hassan to the ball. Leo Ostigard made it 3-1 in the 76th minute from a Martin Odegaard corner, before an own goal by Hussein just before the final whistle completed Norway’s scoring. Iraq entered the tournament as one of the last teams to qualify through the inter-confederation playoff route, and the gap in quality was clear against a Norway side whose attacking power makes it stronger than its FIFA ranking might suggest. Argentina then became the first South American team to win at this World Cup, cruising past Algeria 3-0 at Kansas City Stadium in Kansas City, Missouri. Messi, playing in a record-setting sixth World Cup at the age of 38, scored all three goals. He opened the scoring in the 17th minute, added a second early in the second half and completed his first World Cup hat trick in the 76th minute. The three goals took Messi to 16 career World Cup goals, drawing him level with Germany’s Miroslav Klose for the all-time tournament scoring record. The win also eased Argentina into its title defense and ended South America’s wait for a victory after Brazil, Paraguay, Ecuador and Uruguay all failed to win their opening matches. Austria completed Europe’s perfect day with a 3-1 victory over Jordan at San Francisco Bay Area Stadium in Santa Clara, California. Romano Schmid put Austria ahead in the 21st minute with a powerful strike from outside the box. Jordan, making its World Cup debut, refused to fade and equalized early in the second half through Ali Olwan. The goal gave Jordan its first-ever World Cup goal and reflected a spirited performance from a team that caused Austria problems with its pace and direct attacks. Austria regained the lead in the 76th minute when a corner from Marcel Sabitzer went in off Yazan Al Arab, the FC Seoul defender anchoring Jordan’s back line. Marko Arnautovic, who had earlier seen a goal disallowed, sealed the win with a stoppage-time penalty. The result gave Austria its first World Cup victory in 36 years and strengthened its position in Group J. For Asia, the day brought an abrupt end to a strong early run. South Korea and Australia had won their openers, while Japan, Qatar, Saudi Arabia and Iran had all drawn, but Iraq and Jordan both lost despite flashes of resistance. Africa also endured a difficult day, with Senegal and Algeria both beaten after Egypt, Morocco, Cape Verde and Ivory Coast had earlier shown that African sides could trouble more established opponents. 2026-06-17 17:28:58
BOK chief spells it out: inflation is here to stay and rate hike is coming SEOUL, June 17 (AJP) - The new Bank of Korea governor left little room for doubt: inflation is heading higher and will not come down anytime soon, whether or not the monthslong Gulf war ends this week. The central bank said Wednesday that inflation would remain elevated for a "considerable period," with price pressure gradually shifting from oil and currency shocks to wages and domestic demand. It projected consumer inflation to hover around 3 percent through much of the second half of the year. The message amounted to a textbook case for policy tightening, delivered with unusual weight as Bank of Korea Governor Shin Hyun-song personally led the regular inflation briefing instead of leaving it to director-general level officials. He was joined by Deputy Governor Lee Ji-ho, the head of the central bank's research department and officials overseeing inflation and employment analysis. "It would take some time before the energy supply chain returns to pre-war levels and international oil prices stabilize," Shin said. In its report, the BOK projected consumer inflation to remain around 3 percent in the second half of this year. Core inflation, which excludes food and energy prices, is expected to stay in the mid-to-high 2 percent range. The outlook marks a clear shift from December, when the BOK expected inflation to remain close to its 2 percent target on weaker global oil prices and stable core inflation. Kim Young-joo, director-general of the BOK's Inflation and Employment Department, said inflationary pressure was changing its source rather than disappearing. "Oil-related upward pressure will ease next year, but demand-side pressure will gradually grow, keeping both headline and core inflation above the target," Kim said. The first phase of the inflation shock came from oil prices, a weak won and higher transport costs. The second phase could come from rising wages, income gains and stronger domestic demand. Consumer prices rose 2.4 percent from a year earlier in the first five months of this year, up from 2.2 percent in the second half of 2025. Inflation had hovered around the BOK's 2 percent target before the Gulf crisis but accelerated to 3.1 percent in May, the first reading above 3 percent since March 2024. Living-cost inflation rose to 3.3 percent in May, while core inflation climbed to 2.5 percent. The weak won has added to the burden. The dollar averaged 1,467.35 won in December and 1,491.39 won in May, before rising further to an average of 1,526.58 won in June through June 16. Oil prices have retreated from wartime highs, with WTI and Brent crude falling below $80 a barrel on Tuesday after renewed U.S.-Iran talks raised hopes that shipping through the Strait of Hormuz could normalize. Shin, however, cautioned against being swayed by short-term market moves. "Over the past day or two, oil prices have fallen and other asset prices such as stocks and bonds appear to have shifted into a risk-on mode," he said. "But rather than reacting to daily market fluctuations, we should make judgments based on long-term economic fundamentals." He added that oil prices, much like financial assets, can swing sharply with changes in investor sentiment, making it too early to conclude that the recent decline would be sustained. "The impact of high oil prices can spread beyond energy to other sectors of the economy. The medium- to long-term second-round effects are what matter," Shin said. The BOK said any decline in oil prices could be gradual because of infrastructure repairs and restocking demand, while earlier oil-price gains could continue feeding into domestic prices with a lag. "Cost-side pressure from high oil prices and a weak won will gradually spread beyond petroleum products," Kim said. He added that the delayed effects of higher oil prices could also increase pressure for public utility fee hikes in the second half. The BOK pointed to the Russia-Ukraine war as a precedent, saying crude-price shocks tend to spread from petroleum products to non-energy items with a lag of about six months, including processed food, dining-out services and manufactured goods. The report also flagged wages as a possible second-round inflation channel. Special bonus payments in the IT sector jumped 60.6 percent in the first quarter, though the central bank said the inflationary impact would depend on whether those gains remain concentrated in a few companies or spill over into other industries. Shin tied those risks directly to the bank's policy stance. "We take seriously the fact that higher inflation could add to the economic burden on the public," Shin said. "We will closely monitor inflation trends and respond actively until we are confident that inflation will stabilize at the target level." Since taking office in April, Shin has been unequivocal about the policy shift. At his first rate-setting meeting in May, he indicated that rates would likely move higher before eventually coming down, while keeping the benchmark interest rate unchanged at 2.5 percent for a full year. He further signaled urgency during the central bank's 76th anniversary event last week, saying the BOK would not be late in raising interest rates if inflation risks intensified. The central bank's latest dot plot also pointed to two to three rate hikes ahead. The BOK's next policy meetings are scheduled for July 16 and Aug. 27. Shin, however, brushed aside the possibility of a single 50-basis-point move, saying conditions were not severe enough to warrant the kind of emergency hike seen in previous crises. 2026-06-17 17:00:13
Former trade deputy to spearhead U.S. investment body SEOUL, June 17 (AJP) - Former Deputy Minister for Trade Park Jong-won has been named the inaugural head of the Korea-U.S. Strategic Investment Corporation, a day before the Special Act for Korea-U.S. Strategic Investment Management takes effect to launch the state-backed body tasked with overseeing South Korea’s $350 billion investment commitment to the United States. The Ministry of Economy and Finance and the preparatory committee for the new state entity announced the appointment Wednesday. Park, 57, served as deputy minister for trade at the Ministry of Trade, Industry and Energy until October last year. During his career at the industry ministry, Park held senior posts overseeing middle-market enterprise policy, regional economic policy, automobiles and aerospace, and semiconductors and displays. The new corporation will be responsible for raising, managing and operating funds tied to the $350 billion strategic investment package agreed under a Korea-U.S. memorandum of understanding signed in November last year. The package includes investments in strategic industries and shipbuilding cooperation, as Seoul moves to implement its commitments under the bilateral investment framework. The legal basis for the corporation was established under the Special Act for Korea-U.S. Strategic Investment Management, which passed the National Assembly in March and goes into effect Thursday. The corporation will operate for 20 years from the date of its registration. Its authorized capital is set at 2 trillion won ($1.32 billion), to be paid in cash by the government in annual installments. The special act is the legislative follow-up to months of tariff-driven negotiations that began after Washington imposed a 25 percent reciprocal tariff on South Korean goods in April last year. Seoul later agreed to a framework that lowered the tariff rate to 15 percent in exchange for a $350 billion U.S. investment package, including $150 billion in shipbuilding cooperation. The two countries signed the strategic investment MOU in November, but the tariff threat remained a key source of pressure as Washington pressed Seoul to turn the framework into law. 2026-06-17 14:49:38
BOK further builds up rate hike rationale, seeing inflation around 3% 2H SEOUL, June 17 (AJP) - South Korea's annual inflation rate is expected to run close to 3 percent for the first time in three years this year as the broad impact of the three-month Gulf crisis is likely to spill into the second half even if the conflict ends, the Bank of Korea (BOK) warned Wednesday, building the case for an interest rate hike as early as July. In a report on consumer prices released Wednesday, the central bank estimated headline inflation would hover around 3 percent in the second half. Core inflation, excluding food and energy, is projected to stay in the mid-to-high 2 percent range. Inflationary pressure will likely persist into next year as income gains from higher wages and stock returns gradually replace oil-related cost pressures, the BOK said. The latest assessment marks a sharp reversal from its previous semiannual inflation review in December, when the BOK projected inflation would remain safely around its 2 percent target. In the near term, petroleum prices are likely to remain elevated, while later in the year the oil shock is expected to spread to non-energy core items. Consumer prices rose 2.4 percent from a year earlier in the first five months of this year, up from 2.2 percent in the second half of 2025. Inflation, which had been stable around 2 percent before the outbreak of the Iran war, jumped to 3.1 percent in May, the first reading above 3 percent since March 2024. Living-cost inflation accelerated to 3.3 percent in May, adding pressure on lower-income households that spend a larger share of their income on necessities. Core inflation also rose to 2.5 percent in May as higher fuel surcharges pushed up airfares and package tour prices. The first-half pickup was driven mainly by petroleum and service prices. Agricultural, livestock and fishery products, by contrast, helped ease some of the upward pressure. Before the war, the weak won and elevated fresh food prices caused by volatile weather had been the main inflation drivers. The conflict complicated the outlook by triggering a surge in energy costs that is filtering through to groceries, production inputs and service charges on top of persistent currency weakness. Another emerging source of inflation pressure is rising income from the AI boom, with employees and shareholders of beneficiary companies receiving multimillion-won rewards. The benchmark KOSPI has more than doubled since the beginning of the year. The dollar averaged 1,467.35 won in December and 1,491.39 won in May. In June, it averaged 1,526.58 won through June 16, more than 5 percent higher than the year-to-date average. The oil environment has softened as tensions in the Gulf have eased. The three major crude benchmarks fell below $80 a barrel on June 17 after renewed U.S.-Iran talks revived hopes that oil flows through the Strait of Hormuz could recover. That is well below the wartime highs seen earlier this year, but still above the level that underpinned the BOK's more benign view in December. The BOK said oil prices could continue to decline if U.S.-Iran negotiations make progress and shipping traffic through the Strait of Hormuz normalizes. But the adjustment is likely to be gradual because of infrastructure repairs and restocking demand. The central bank also warned that earlier gains in oil prices could continue to filter through the economy with a lag even if spot prices retreat further. The report is likely to reinforce expectations that the BOK could raise interest rates as early as its July policy meeting. The central bank held its benchmark rate at 2.50 percent last month, but board members Chang Yong-sung and Ryoo Sang-dai dissented in favor of a 25-basis-point increase. The BOK's latest dot plot also leaned heavily toward tighter policy, with 19 of 21 six-month rate projections pointing to a policy rate above the current level. Market analysts increasingly expect the BOK to raise rates by 25 basis points in July, or by August at the latest, citing higher inflation and growth forecasts, elevated oil prices and a weaker won. The BOK cited the Russia-Ukraine war as a guide to how oil shocks propagate through the economy. During that episode, higher crude prices were rapidly reflected in petroleum products, while indirect effects on non-energy goods began to emerge about six months later. A similar pattern could unfold this time, the central bank said. Cost pressures could spread to processed foods, dining-out services and manufactured goods even after the direct impact of higher oil prices begins to fade. Government measures have so far cushioned some of the pressure, including caps on refinery supply prices, expanded fuel-tax cuts and frozen public utility fees. However, the BOK warned that pressure to raise utility charges could build later this year as the oil shock works its way through the economy with a lag. Wages are another source of risk. Special bonus payments in the IT sector surged 60.6 percent in the first quarter. The inflationary impact would remain limited if the gains stay concentrated among a small number of companies. But broader spillovers into other sectors could amplify overall price pressures, the report said. Inflation expectations have also moved higher. Households' one-year inflation expectations rose to 2.8 percent in May, while short-term expectations among experts moved into the mid-2 percent range. Long-term expectations among experts, however, remained slightly below 2 percent. The BOK said it will closely monitor inflation conditions, as price pressures are expected to remain elevated for a considerable period. Bond yields retreated sharply as expectations of a rate-hike cycle prompted investors to take profits on earlier bets, with longer-dated securities leading the decline. By midday Wednesday, the three-year government bond yield had slipped 1.4 basis points to 3.70 percent, down sharply from 3.94 percent last Thursday. The 10-year and 20-year government bond yields fell 3.0 basis points and 3.3 basis points, respectively, to 4.08 percent and 4.22 percent. 2026-06-17 14:02:13
Won, bonds stay calm despite BOJ hike; credit spread widens slightly SEOUL, June 16 (AJP) - South Korea’s foreign exchange and bond markets remained largely steady Tuesday despite the Bank of Japan’s first rate hike to 1 percent in 31 years, while corporate credit showed mild signs of caution following default concerns at JoongAng Group affiliates. The won closed at 1,513.5 per dollar, little changed from the previous session. Korean government bond yields fell. The three-year yield dropped 2.7 basis points to 3.717 percent, while the 10-year yield declined 0.8 basis point to 4.110 percent. Unsecured three-year corporate bond yields also fell 1.9 basis points to 10.178 percent. The decline was smaller than the fall in three-year government bond yields, meaning the credit spread widened slightly. Corporate bond yields also fell, but by less than government bond yields, leaving credit spreads slightly wider - suggesting that lower-rated credit did not fully join the government bond rally, as investors remained cautious after default and rehabilitation concerns at JoongAng Group affiliates. The move came after JTBC failed to repay 20.6 billion won in securitized borrowings, triggering rehabilitation filings by five JoongAng Group affiliates, including JoongAng Holdings, JTBC, Contentree JoongAng, Megabox JoongAng and JoongAng P&I. So far, however, the market appears to be treating the case largely as an idiosyncratic credit event rather than the start of a broader corporate bond sell-off. The Japanese central bank raised its short-term policy rate by 25 basis points to 1 percent from 0.75 percent, taking Japanese rates back into the 1 percent range for the first time since September 1995. The current short-term policy rate is not directly identical to the official discount rate used at the time, but the move marks Japan’s return to a rate level not seen in more than three decades. The BOJ also said it would reduce government bond purchases as planned through the January-March period of 2027, before keeping monthly purchases at around 2 trillion yen from April. The rate hike marked the BOJ’s fifth increase since it ended negative rates in March 2024, and its fourth 25-basis-point hike in the current normalization cycle. Still, the decision did not deliver a major hawkish surprise, with no signal of a faster tightening path or a sharper reduction in bond purchases. Before the meeting, TD Securities had described a June hike as a foregone conclusion, while Wells Fargo expected only a limited immediate currency reaction, saying energy prices and Federal Reserve policy remained bigger drivers for the yen. The yen also showed a limited reaction after the decision, reducing spillover pressure on other Asian currencies, including the won. In Seoul, foreign investors bought more than 1.5 trillion won worth of KOSPI shares, supporting demand for the won and broader risk sentiment. The benchmark KOSPI briefly slipped into negative territory during intraday trading, but extended gains after the BOJ announcement and traded more than 2 percent higher around the 8,720 level. The BOJ decision also came as Governor Kazuo Ueda missed the meeting after being hospitalized for treatment of an infected liver cyst, according to the central bank. Attention is now turning to the Federal Reserve, where Chair Kevin Warsh is set to lead his first Federal Open Market Committee meeting on June 17 local time. The Fed is widely expected to keep its benchmark rate unchanged at 3.50 percent to 3.75 percent, with investors watching Warsh’s first post-meeting press conference and updated economic projections for clues on whether U.S. rates could still rise later this year. 2026-06-16 17:34:37
World Cup 26: Asia holds firm, New Zealand shine, and South America winless SEOUL, June 16 (AJP) - Asian teams extended their unbeaten start to this year's FIFA World Cup on Monday, while New Zealand marked its return to the tournament with a spirited draw. South America's wait for a first win continued as Uruguay fell short of victory. Four matches played across the U.S. produced no wins for the traditional favorites. Spain was held to a 0-0 draw by Cape Verde in Atlanta, Georgia, as the World Cup debutants frustrated one of Europe's strongest teams. Cape Verde goalkeeper Vozinha was the hero, making seven saves as Spain poured forward but failed to break through. La Roja controlled most of the match and had 27 attempts, but Cape Verde defended deep, stayed compact and survived several dangerous moments. Spanish Teenage winger Lamine Yamal came on in the second half in hopes of turning the match around, but even his appearance failed to produce a breakthrough. The result gave Cape Verde its first point in their first World Cup match. Belgium also failed to start with a win, drawing 1-1 with Egypt in Seattle, Washington. Egypt took the lead in the 19th minute when midfielder Emam Ashour scored after being set up by Mohamed Salah. The goal gave Egypt hope of a historic first World Cup victory, and the African side played with confidence for much of the match. Belgium was below its best until Romelu Lukaku came on in the second half. Lukaku did not score, but his movement inside the box helped force Mohamed Hany into an own goal, allowing Belgium to escape with a point. For Egypt, the draw was a strong result on paper but also a missed chance after it had put themselves in position to beat one of Europe's top sides. Saudi Arabia then kept Asia's unbeaten run alive with a 1-1 draw against Uruguay in Miami Gardens, Florida. The Saudis went ahead in the first half through Abdulelah Al Amri and spent long stretches trying to protect its lead. Dictating the tempo in the second half, Uruguay eventually found an equalizer through Maxi Araujo, denying Saudi Arabia a second straight World Cup opening win after its famous victory over Argentina in 2022. Still, the result was another sign of Asia's strong start, following earlier wins by South Korea, Australia - and draws by Japan and Qatar. The final match of the day brought another twist as 85th-ranked New Zealand held 21st-ranked Iran to a 2-2 draw at Los Angeles Stadium in Inglewood, California. Iran entered the match under unusual circumstances, having had to base themselves in Mexico and travel into the U.S. for matches because of visa issues. New Zealand, back at the World Cup for the first time since its unbeaten three-draw campaign in South Africa in 2010, made an immediate impression. Elijah Just scored New Zealand's opener and later restored its lead, with captain and star striker Chris Wood providing both assists. Iran twice equalized through Ramin Rezaeian and Mohammad Mohebi, but New Zealand still left with a valuable point in its first World Cup match in 16 years. The result kept the group-stage round finely balanced after Belgium and Egypt also drew earlier in the day. Asia's unbeaten run in the opening round of group matches now depends on three remaining teams: Iraq, who face Norway later Tuesday, Jordan, who meet Austria early Wednesday, and Uzbekistan, who open against Colombia later that day. South American teams that have played are still waiting for their first win, with Argentina set to open against Algeria at Kansas City Stadium on Tuesday and Colombia due to face Uzbekistan at Estadio Banorte in Mexico City on Wednesday The All Whites' task remains daunting, with the 85th-ranked All Whites still facing 29th-ranked Egypt and ninth-ranked Belgium in what looks like an almost impossible push for the knockout stage. 2026-06-16 16:37:42
BOJ raises rate to 1% for first time in 31 yrs; markets calm SEOUL, June 16 (AJP) - The Bank of Japan raised its policy rate by 25 basis points to 1 percent on Tuesday, pushing Japanese interest rates into the 1 percent range for the first time since 1995 as the country continues its gradual exit from decades of ultra-loose monetary policy amid rising inflationary pressure fueled by Gulf-related energy shocks. Japan, which has maintained near-zero interest rates since the mid-1990s to combat chronic deflation, is now confronting many of the same challenges facing South Korea: higher import costs stemming from a weak currency and elevated energy prices as both economies remain heavily dependent on Middle Eastern energy supplies. Financial markets reacted calmly, suggesting the move had been widely anticipated. The Nikkei 225 rose nearly 1 percent after trading largely flat before the announcement. South Korean markets showed little immediate impact, with the KOSPI up about 2 percent, while the dollar traded at 160.13 yen and 1,513.6 won as of 1 p.m. Seoul time. Korean government bond yields were mostly unchanged. The BOJ also reaffirmed plans to continue reducing its government bond purchases through the January-March quarter of 2027 before stabilizing monthly purchases at around 2 trillion yen beginning in April 2027. The decision marks the first return to the 1 percent range since September 1995, when the BOJ lowered its official discount rate from 1 percent to 0.5 percent. While today's short-term policy rate is not directly comparable with the official discount rate used at the time, the move nonetheless signals a return to an interest-rate level Japan has not seen in more than three decades. Inflationary pressures have continued to build. Japan's producer price index rose 6.3 percent from a year earlier in May, the fastest pace in three years. Even after Tuesday's increase, however, Japan's policy rate remains among the lowest in the developed world. The meeting also unfolded under unusual circumstances. BOJ Governor Kazuo Ueda was absent after being hospitalized for treatment of an infected liver cyst, according to the central bank. Deputy Governor Ryozo Himino chaired the meeting in his place, while Deputy Governor Shinichi Uchida was scheduled to explain the decision during the post-meeting press conference. For South Korea, the move narrows the policy-rate differential with Japan. With the Bank of Korea maintaining its benchmark rate at 2.50 percent, the gap between the two countries has narrowed to 150 basis points from 175 basis points previously. Before the meeting, TD Securities described a June rate hike as a foregone conclusion, while Wells Fargo said the immediate impact on the yen would likely be limited, arguing that global energy prices and future policy decisions by the Federal Reserve System remain more important drivers of currency movements. Investors are now expected to shift their attention to the BOJ's guidance on additional rate increases and its bond-purchase strategy beyond April 2027. 2026-06-16 13:08:46
Korea's M2 growth tops 10% under old gauge, fastest in over 4 years SEOUL, June 16 (AJP) -South Korea's money supply growth accelerated in April, with broad money under the previous M2 definition expanding at a double-digit pace for the first time in more than four years, partly explaining the stubbornly weak currency and frenzied asset investment. The Bank of Korea said Tuesday that broad money, or M2, averaged 4,153.9 trillion won ($2.79 trillion) in April on a seasonally adjusted basis, up 25.3 trillion won from the previous month. That translated into a 0.6 percent monthly increase, faster than March's 0.4 percent gain. On an annual basis, M2 rose 5.7 percent, accelerating from 5.5 percent in March and 4.9 percent in February. Under the previous M2 calculation method, however, the increase was far sharper. Old-method M2 averaged 4,684.6 trillion won in April, up 10.3 percent from a year earlier. It was the first double-digit expansion since March 2022, when the comparable figure stood at 10.8 percent. The pace was also among the fastest globally. Only China and Taiwan recorded stronger broad money growth in April, while the United States, Japan, the euro area and the United Kingdom all posted slower increases. The April data also showed a change in the composition of money growth. The main drivers shifted to deposits with maturities of less than two years and other monetary instruments in April - unlike March when money supply growth was led mainly by money market funds and instant-access savings deposits. Deposits with maturities of less than two years increased by 13 trillion won from the previous month. Other monetary instruments rose by 8.3 trillion won. The shift suggests that April's increase was driven more by flows into deposit-type and money-like financial products than by the short-term standby funds that shaped the March data. By holder, both companies and households increased their money holdings. M2 held by non-financial companies rose by 16.1 trillion won from the previous month, while households and nonprofit organizations added 7 trillion won. Other sectors, including social security funds and local governments, increased their holdings by 100 billion won, while other financial institutions reduced their holdings by 600 billion won. Narrow money, or M1, also grew at a faster pace. M1 rose 0.4 percent from the previous month and 8.3 percent from a year earlier, compared with a 7.8 percent annual increase in March. Liquidity at financial institutions, or Lf, increased 0.5 percent on month and 7.3 percent from a year earlier. The broadest liquidity gauge, L, rose 1.8 percent from the previous month and 8.1 percent from a year earlier. The continued rise in liquidity could add to policy concerns as interest rates face upward pressure and the won remains weak. The composition of April's increase, however, suggests caution in reading the data as a direct sign of stronger consumption or overheating in asset markets, as gains were led by time deposits and other monetary instruments The BOK began including Investment Management Accounts (IMAs) offered by comprehensive financial investment firms in Lf from this release. As IMAs were first issued in December 2025, the data were applied retroactively from that month. The central bank also revised parts of the M1, M2, Lf and L series from December 2022 onward to reflect changes in source data for external-sector statistics and other underlying data adjustments. 2026-06-16 12:39:06
Korea's import prices may have peaked out while chip exports power ahead SEOUL, June 16 (AJP) - South Korea's import prices may have peaked out after the Gulf war-driven oil shock eased in May, while soaring semiconductor prices continued to buttress the country's trade strength, central bank data showed Tuesday. The won-denominated import price index fell 0.3 percent in May from a month earlier, according to preliminary export-import price data released by the Bank of Korea. The decline followed a 2.1 percent drop in April after import prices had surged 18.0 percent in March when war in the energy-rich Gulf region sent crude oil prices sharply higher. The central bank said lower prices for mining products, coal and petroleum products drove the latest decline. Brent crude averaged $107.14 per barrel in May, down from $117.29 in April, while Dubai crude, a benchmark closely watched in South Korea, fell to $103.15 from $105.70 over the same period. Import prices had risen only 0.4 percent in January and 1.5 percent in February before the conflict triggered a sharp spike in March. Annual comparisons, however, showed price pressures remained elevated. Import prices fell 1.2 percent year-on-year in January and rose 1.6 percent in February before accelerating to 20.4 percent in March, 20.5 percent in April and 24.8 percent in May. Energy-related products continued to account for much of the increase. Import prices for mining products rose 42.4 percent from a year earlier in May, while coal and petroleum products jumped 73.1 percent. Raw material import prices fell 1.0 percent from April but remained 38.9 percent higher than a year earlier. Intermediate goods prices were unchanged from April as gains in primary metal products offset lower prices for coal and petroleum products. The data suggest that earlier increases in energy costs are still filtering through supply chains despite recent easing in global oil prices. Export prices moved in the opposite direction. The won-denominated export price index rose 0.3 percent from April and jumped 46.9 percent from a year earlier. Export prices increased 4.0 percent in January and 2.5 percent in February before rising 17.0 percent in March, 7.5 percent in April and 0.3 percent in May. Although the pace of monthly gains slowed in May, export prices continued to receive strong support from semiconductors. Prices for computer, electronic and optical products rose 5.4 percent from April and 104.0 percent from a year earlier. The category export price of 208.98 was highest since July 2010. Memory chips were the biggest contributor. DRAM prices surged 259.7 percent year-on-year, while NAND flash memory prices jumped 223.0 percent. Export prices for coal and petroleum products fell 11.0 percent from April as oil prices eased, though they remained 88.6 percent higher than a year earlier. The divergence between cooling import costs and resilient export prices helped improve South Korea's terms of trade. The net barter terms of trade index rose 18.7 percent from a year earlier in May, while the income terms of trade index climbed 36.1 percent. Export volumes increased 14.7 percent on year, led by semiconductors and other computer, electronic and optical products. Import volumes rose 5.2 percent, supported by increased purchases of electronic products as well as machinery and equipment. The May figures indicate that the energy shock that rattled South Korea's trade balance earlier this year has likely passed its peak, although price pressures remain elevated compared with a year ago. Expectations for further easing have strengthened after the United States and Iran reached a framework agreement aimed at ending the conflict and restoring stability to global energy markets. Oil prices have fallen back to the low-$80 range, returning to levels last seen in early March before the Gulf conflict escalated, though a persistently weak won continues to limit the relief, trading at around 1,515 per dollar compared with monthly averages of 1,490.11 in May and 1,487.39 in April. 2026-06-16 07:48:18
Korean won, bonds rally on U.S.-Iran framework SEOUL, June 15 (AJP) - The South Korean won and government bonds strengthened Monday on signs of foreign return after a de facto resolution to the monthslong Iran crisis. The won closed at 1,511.1 per dollar in the Seoul foreign exchange market, down 8.7 won from the previous session. South Korean government bonds extended last week's rally. The yield on the three-year government bond fell 6.4 basis points to 3.744 percent, while the 10-year yield dropped 7.7 basis points to 4.118 percent. The won and bonds were also supported by a recovery in risk appetite. The benchmark KOSPI jumped 5.2 percent to close at 8,545.98, with foreign investors buying a net 985.8 billion ($652.4 million) won worth of shares on the main bourse. The global market reaction was broad-based. Before regular U.S. stock trading began, Nasdaq-100 futures rose nearly 2 percent and S&P 500 futures gained around 1 percent, while the dollar index fell to its lowest level since June 5 and U.S. Treasury yields declined. The sharpest move came in oil. Brent crude fell more than 4 percent to the low-$83 range per barrel, while West Texas Intermediate (WTI) dropped more than 5 percent, as markets priced in the possible reopening of the Strait of Hormuz and the lifting of a U.S. naval blockade on Iran. The market moves came after Pakistan said the United States and Iran had reached a framework aimed at ending the war. U.S. President Donald Trump said Sunday U.S. time that the deal with Iran was “done,” while Pakistani Prime Minister Shehbaz Sharif said the agreement would be formally signed in Switzerland on Friday. Still, the deal appears closer to a preliminary framework or memorandum of understanding than a final peace agreement. Core issues, including Iran's nuclear program, sanctions relief and frozen assets, are expected to be addressed in follow-up negotiations during a 60-day ceasefire. For Korean markets, the immediate impact came through oil, the dollar and U.S. Treasury yields rather than a direct shift in Federal Reserve expectations. Lower oil prices eased inflation concerns, while weaker U.S. yields helped support domestic bonds and reduced upward pressure on the dollar-won rate. The move also eased some of the market's tightening concerns ahead of this week's Federal Open Market Committee (FOMC) meeting. The framework is not enough on its own to revive expectations for rate cuts this year, but it is helping reduce the perceived risk of a rate hike later in 2026. The Federal Reserve is widely expected to keep the federal funds rate unchanged at the current 3.50 to 3.75 percent range this week, leaving investors focused on its updated economic projections and dot plot. The March dot plot had pointed to one 25-basis-point cut by year-end, but expectations had turned more hawkish before the U.S.-Iran framework was announced, as higher oil prices and strong U.S. employment data raised concerns over renewed inflation pressure. After the strong jobs data released on June 5, futures markets raised the implied probability of a December rate hike to about 68 percent. According to Reuters, markets on Monday put that probability at around 48 to 50 percent, down from the 69 to 70 percent range seen a week earlier. The baseline after the agreement is therefore less a dovish pivot than an easing of hawkish pressure. The median dot in the June projections may still point to rates being held through year-end, but the case for higher dots that imply a rate hike in late 2026 has weakened. Markets are stripping out part of the Middle East inflation premium for now, but the agreement has yet to be formally signed and key issues remain unresolved. If the framework falters, oil prices and inflation risks could quickly return to the center of the FOMC debate, putting renewed pressure on the won and South Korean bonds. 2026-06-15 17:23:17