Journalist

Kim Yeon-jae
  • Seoul waives duties on freight surge to curb inflation spillover
    Seoul waives duties on freight surge to curb inflation spillover SEOUL, April 3 (AJP) — South Korea will waive customs duties on extraordinary freight cost increases for imports from the Middle East, as the crippling of the Strait of Hormuz threatens to spill into domestic prices and broader inflation. The emergency measure, announced Friday by the Ministry of Economy and Finance, allows companies to exclude surging shipping costs incurred from longer alternative routes when calculating import duties. The move comes as tanker freight rates on Middle East–China routes have soared 608 percent from a year earlier, with the chokepoint effectively sealed by Iranian forces. Customs duties are typically levied on the total value of imports, including freight. By excluding the recent spike in shipping costs, the government aims to ease the burden on importers and contain pass-through inflation. “U-turn cargo” — shipments originally destined for the Middle East but forced to return — will face minimal inspections, while key imports such as energy and raw materials will be granted pre-arrival clearance to ensure immediate domestic supply upon arrival. Administrative procedures for supply-sensitive items will also be streamlined. For raw materials used in paint and polyethylene (PE) resin, firms will be allowed to submit testing plans in place of full toxicity data, cutting approval timelines from more than three months to a fraction of that period. In the pharmaceutical and medical device sectors, a fast-track review system will prioritize essential items such as IV solutions, sanitary pads and injection needles. On-site Good Manufacturing Practice (GMP) inspections required for facility changes will be replaced with document-based reviews. To preempt shortages in daily necessities, quality inspections for items such as municipal trash bags will be reduced from 10 days to one. The 100 million won ($66,000) cap on direct purchases by local governments will also be temporarily lifted. For asphalt, where prices have climbed alongside crude oil, authorities will advise local governments to delay non-urgent road maintenance projects. In the case of automotive urea, the government will facilitate inter-company trading and may release public stockpiles if needed. Fertilizer-grade urea supply will be stabilized through the National Agricultural Cooperative Federation (Nonghyup). “Eight of the 13 measures will take effect immediately, with the remaining regulatory revisions to be completed within two weeks,” First Vice Finance Minister Lee Hyung-il said. “We will maintain these temporary exemptions until the emergency subsides, while closely monitoring for potential side effects.” 2026-04-03 13:29:28
  • Koreas FX reserves slip $4 bn as won defense cost soars
    Korea's FX reserves slip $4 bn as won defense cost soars SEOUL, April 3 (AJP) — South Korea’s foreign exchange reserves fell by nearly $4 billion in March, underscoring the growing strain on the country’s external buffers as authorities continue to defend the won against crisis-era pressure. The Bank of Korea said Friday that reserves stood at $423.66 billion at end-March, down $3.97 billion from $427.62 billion a month earlier. That marked the steepest monthly decline since April 2024, when reserves fell by $5.99 billion as the won also plunged amid global market turmoil following the U.S. Federal Reserve’s decision to keep interest rates at a two-decade high. The drop came even after the government issued foreign exchange stabilization bonds in February, suggesting that the temporary boost from those proceeds was not enough to offset persistent intervention demand and valuation losses. The BOK said the March decline reflected a lower dollar value of non-dollar assets as well as market-stabilization operations, including foreign exchange swaps with the National Pension Service. The latest figures also highlighted how heavily authorities have leaned on liquid reserves. Securities, which accounted for 89.2 percent of total holdings, fell by $2.26 billion. Deposits — the most readily deployable portion of reserves — dropped by $1.44 billion, or 6.4 percent, to $21.05 billion from $22.49 billion a month earlier. Special Drawing Rights fell by $200 million to $15.57 billion, while the IMF reserve position stood at $4.55 billion. The reserve decline comes as the won remains under intense pressure. South Korean authorities sold a net $22.467 billion in the fourth quarter of 2025 for market stabilization, the largest quarterly intervention on record, according to the BOK’s latest disclosure. That compared with net dollar sales of $1.75 billion in the third quarter, $797 million in the second and $2.96 billion in the first. The broader market backdrop remains hostile. The won this week slid past 1,520 per dollar, levels not seen since 2009, as South Korean markets reeled from the prolonged Middle East war and heavy foreign selling. South Korea also slipped out of the global top 10 in reserve holdings. As of end-February, the country ranked 12th in the world, down from 10th a month earlier, according to the BOK. The central bank said some peers benefited from marking gold holdings to market as bullion prices rose. The latest data suggest Seoul is still willing to spend reserves to smooth volatility, but they also show the cost of that defense is mounting as dollar demand stays elevated and the external shock drags on. 2026-04-03 08:26:17
  • Stock, FX, and debt in triple win in Seoul, but lasting strength hinges on Gulf
    Stock, FX, and debt in triple win in Seoul, but lasting strength hinges on Gulf SEOUL, April 1 (AJP) — South Korea's war-beleaguered capital markets roared back with all three assets — stocks, the won and bond prices — strengthening sharply Wednesday, helped by talk of a Gulf war endgame and a rush of foreign capital into the debt market on the first day of Korea’s inclusion in the World Government Bond Index. But since much of the rally hinges on Gulf developments, the sustainability of the gains remains in question. The dollar tumbled below 1,500 won Wednesday, a stunning retreat from above 1,530 in the previous session. Bond yields also retreated, showing a rare moment of strength, with the three-year government bond yield falling 17.7 basis points to around 3.38 percent and the 10-year yield dropping 19.1 basis points to 3.691 percent. The KOSPI ended 8.4 percent higher. While expectations of a war exit in the Gulf fueled equities, the primary boost to the currency and debt markets came from WGBI inclusion, while the passage of the "Exchange Rate Stability Act" played only a small supporting role. After a year’s delay, FTSE Russell, a subsidiary of the London Stock Exchange, finalized South Korea’s inclusion in the WGBI, with phased purchases of Korean government bonds set from April 1 to Nov. 8, 2026. Inclusion in the WGBI is often likened to a "blue-chip" certification for a country’s sovereign debt. At least 2 percent of the $2.5 trillion index — equivalent to roughly $50 billion — is expected to be allocated to Korean government bonds, triggering an influx of foreign capital. Unlike typical emerging market debt flows, WGBI-related funds are primarily "passive" capital aimed at long-term investment. While emerging market debt is often traded within months, WGBI funds tend to be held for several years, providing a stabilizing effect on the currency market. "Foreign financial institutions and primary dealers forecast an inflow of $50 billion to $60 billion following the WGBI inclusion, and we have confirmed capital inflows starting this week," wrote Goo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, on his X account, echoing the optimistic outlook. Traders are not as optimistic. "While we saw strength today, it is still insufficient considering that bond yields have surged by 40 to 60 basis points this year alone," said a bond trader at a commercial bank on condition of anonymity. "Since the blockade of the Strait of Hormuz remains the dominant issue, we are treating the WGBI news as a short-term factor." Yoon Yeo-sam, a researcher at Meritz Securities, also noted that "macro uncertainties, such as delayed U.S. rate cuts and the exchange rate breaching the 1,500 level, are overshadowing the positive impact of the index inclusion." The so-called reshoring incentive as part of the FX Stability Act drew even more cynicism. Brokerages have been selling Reshoring Investment Accounts since March 23, offering various tax incentives for those who reinvest dollar-based assets into Korean ones. The accounts sold by 10 brokerages have so far drawn 400 billion won ($265 million), about 0.2 percent of the roughly $150 billion in U.S. stocks held by South Koreans. Investors scoffed at the limited incentives, with tax benefits capped at 50 million won. "After investing in U.S. stocks for over a decade, my balance is well into the hundreds of millions of won," said one investor. "Unless the tax benefits are significantly expanded for larger and longer-term investments, I have no reason to return." For others, there is little reason to cash out of U.S. dollar assets, as no tax benefit is enough to offset exchange losses. "I entered the U.S. market a year ago when the rate was around 1,300 won," said another investor. "With the rate now near 1,500, returning to the domestic market and then trying to re-enter U.S. stocks later would cost me more than 10 percent of my principal." Experts agree that RIAs will struggle to attract investors without addressing fundamental issues. "Asking investors to liquidate overseas assets and bring them back in won when the currency is undervalued essentially damages their expected returns," said Kang Hyun-joo, a senior research fellow at the Korea Capital Market Institute. "Unless currency stabilization comes first, the RIA will remain little more than a nominal policy." 2026-04-01 17:13:11
  • South Koreas March exports hit $80b mark
    South Korea's March exports hit $80b mark SEOUL, April 1 (AJP) — South Korea raised the bar on exports again, achieving fresh monthly high of over $80 billion in March as an unprecedented boom in the semiconductor sector more than offset supply disruptions from the outbreak of a war in the Middle East. According to data released by the Ministry of Trade, Industry and Energy on Wednesday, exports for March reached all-time monthly high of $86.13 billion, up 48.3 percent on year. The previous monthly record was $69.5 billion set in December last year. Monthly exports have extended record-setting winning streak for 10 consecutive months, largely hinged on chip demand. Chip shipments in March skyrocketed 151.4 percent to record $32.83 billion and responsible for nearly 40 percent of March exports. This is the first time monthly semiconductor exports have exceeded the $30 billion mark, eclipsing the previous high of $24.2 billion set in March 2022 during a period of surging DRAM prices. Imports rose 13.2 percent to $60.4 billion. Consequently, the trade balance recorded a surplus of $25.74 billion, marking 14 consecutive months of surplus since February last year. 2026-04-01 10:10:38
  • Korea burned $22.5 bln defending won Q4, USD-KRW nears 1,530
    Korea burned $22.5 bln defending won Q4, USD-KRW nears 1,530 SEOUL, March 31 (AJP) -South Korea spent a staggering $22.5 billion in the final quarter of 2025 to stabilize the won, as the currency hovered near crisis-era lows amid intensifying capital outflows and dollar demand, central bank data showed. Net dollar sales for “market stability” surged to $22.47 billion in the fourth quarter, the Bank of Korea said in its disclosure of its intervention balance sheet — a sharp escalation from $1.75 billion in the third quarter, $797 million in the second and $2.96 billion in the first. The October-December interventionist spending is the largest three-month record since disclosure started in 2019. The intervention brought total spending for the year to roughly $28 billion, the largest since 2022 when authorities struggled to tame the won amid Legoland debt crisis from rapid tightening in the U.S. The won averaged 1,450.71 per dollar in the first quarter, strengthening modestly to 1,399.13 in the second and 1,386.77 in the third, before weakening sharply to 1,448.87 in the fourth — when intervention intensified. “Supply-demand conditions were extremely skewed in the fourth quarter. Outflows by residents far exceeded the current account surplus,” Yoon Kyung-soo, director of the BOK's international department said in a briefing. “In October alone, overseas securities investment by residents was roughly three times the size of the current account surplus," he added. The won lifted partly by dollar retreat and intervention gave ground after the war in the Middle East broke out. The dollar briefly touched 1,530 won, revisiting the level of March 2009 amid global financial crisis in Tuesday trading. The won has lost more than 6 percent of its value against the dollar, double the gain in the dollar index over the same period. Authorities said they were "closely monitoring" if one-sided bias deepens and the won's depreciation is deemed too steep versus other currency movements. 2026-03-31 16:16:13
  • Korean Economy/Business Calendar
    Korean Economy/Business Calendar SEOUL, March 31 (AJP) - Apr. 2 (Thu) Mar. 2026 Consumer Price Index (Preliminary) - Ministry of Data and Statistics Apr. 8 (Wed) Feb. 2026 Balance of Payments (Preliminary) - Bank of Korea Apr. 9 (Thu) 2025 Flow of Funds (Preliminary) - Bank of Korea Apr. 15 (Wed) Feb. 2026 Money and Liquidity - Bank of Korea Mar. 2026 Export/Import Price & Trade Indexes - Bank of Korea Mar. 2026 Employment Trends - Ministry of Data and Statistics Apr. 22 (Wed) Mar. 2026 Producer Price Index (PPI) (Preliminary) - Bank of Korea Apr. 23 (Thu) Apr. 2026 Consumer Survey Index (CSI) - Bank of Korea Q1 2026 Real GDP (Advance Estimate) - Bank of Korea Apr. 28 (Tue) Apr. 2026 Business Survey Index (CBSI) & Economic Sentiment Index (ESI) - Bank of Korea Apr. 30 (Thu) Mar. 2026 Industrial Activity Trends - Ministry of Data and Statistics *1Q 2026 Tentative Earnings Release Schedule (Estimates only) Week 1: Apr 6 (Mon) – Apr 10 (Fri) Samsung Electronics (Preliminary) LG Electronics (Preliminary) Week 3: Apr 20 (Mon) – Apr 24 (Fri) Hyundai Motor Kia KB Financial Group Shinhan Financial Group Hana Financial Group Woori Financial Group Week 4: Apr 27 (Mon) – Apr 30 (Thu) SK hynix (Final/Breakdown) Samsung Electronics (Final/Breakdown) LG Energy Solution POSCO Holdings NAVER Samsung Biologics Celltrion LG Chem 2026-03-31 15:10:31
  • Korean won at crisis lows, but no crisis, says BOK chief nominee
    Korean won at crisis lows, but no crisis, says BOK chief nominee SEOUL, March 31 (AJP) -The South Korean won weakening past the 1,520-per-dollar mark — its lowest level since the global financial crisis in March 2009 — should not be overstated as a sign of crisis, as the country's financial system is far more resilient than in the past, Bank of Korea governor nominee Shin Hyun-song said Tuesday. “What matters more than the level itself is whether the financial system can accommodate it,” Shin told reporters as he arrived at his temporary office ahead of his confirmation hearing. “From that perspective, it should not be a concern.” Shin, a veteran economist from the Bank for International Settlements (BIS), stressed that exchange rate levels alone should not be interpreted as a trigger for financial instability. “The level itself should not be given too much meaning,” he said. “The exchange rate is one indicator of how much risk the financial system can absorb, and in that sense, there is no major concern.” He added that dollar liquidity remains ample, pushing back against fears that the sharp depreciation of the won could lead to capital flight or funding stress. “There is no need to directly link the exchange rate to financial instability,” Shin said. On external risks, Shin pointed to the ongoing Middle East conflict as the most immediate concern for the Korean economy. “In the short term, it is clearly the situation in the Middle East,” he said. “Rising oil prices will put upward pressure on inflation while posing downside risks to growth.” Still, he cautioned that the uncertainty surrounding the scale and duration of the conflict makes it difficult to draw firm conclusions at this stage. Shin also noted that South Korea’s external financial structure has improved significantly compared to past crises, particularly in terms of capital flows and dollar funding. He highlighted structural changes in the market, where foreign investors increasingly access Korea’s bond market through foreign exchange swaps — lending dollars while borrowing won — which in turn helps ensure stable dollar funding. “That structure actually supports dollar liquidity,” he said. On monetary policy stance, he also dismissed labels such as “hawk” or “dove” as overly simplistic. “I don’t think it is desirable to view policy through a binary lens,” he said. “What matters is reading the economic flow, understanding the interaction between the financial and real sectors, and responding flexibly depending on the situation.” Shin's remarks however failed to improve market confidence. The dollar was trading at 1,525 against the dollar as of 11:30 a.m. and the main KOSPI and secondary KOSDAQ both fell more than 2 percent. The bond yields rose, finding Shin less hawkish than expected. The three-year government bond yield fell 1.3 basis points to 3.529 percent, while the 10-year yield dropped 2.7 basis points to 3.864 percent. 2026-03-31 10:38:16
  • Korean banks BIS ratio turn lower as weak won inflates FX assets
    Korean banks' BIS ratio turn lower as weak won inflates FX assets SEOUL, March 31 (AJP) - South Korean banks’ capital buffers edged lower at the end of last year as the won’s sharp weakening inflated foreign-currency assets, underscoring growing pressure from exchange-rate-driven balance sheet expansion, data showed Tuesday. The common equity Tier 1 (CET1) ratio of domestic banks stood at 13.51 percent at end-2025, down 0.12 percentage point from the previous quarter, according to the Financial Supervisory Service. The decline came despite steady earnings, as a weaker won boosted the value of foreign-denominated loans and assets, increasing risk-weighted assets and diluting capital ratios. Other key capital metrics also slipped. The Tier 1 capital ratio fell 0.08 percentage point to 14.80 percent, while the total capital ratio dropped 0.09 percentage point to 15.83 percent. The leverage ratio edged down to 6.76 percent. The data highlights how currency-driven balance sheet effects — rather than credit deterioration — are emerging as a key variable for capital adequacy, particularly as Korean lenders maintain sizable foreign-currency exposure. Still, overall capital levels remained comfortably above regulatory thresholds, indicating that the banking sector retains solid loss-absorbing capacity. By bank, most major lenders maintained strong buffers, with several including KB, Woori, Citi and SC posting total capital ratios above 16 percent, reflecting ample resilience. However, the downward drift was broad-based. Thirteen banks saw their CET1 ratios decline from the previous quarter, while only a handful posted gains. Supervisors warned that risks could intensify as geopolitical tensions and a prolonged strong dollar environment lift both funding costs and credit risks. Authorities said they would step up monitoring of capital adequacy and encourage banks to bolster loss-absorbing buffers to navigate potential shocks from high oil prices and currency volatility. 2026-03-31 07:58:19
  • Little sign of relief for the Korean won and bonds amid capital flight
    Little sign of relief for the Korean won and bonds amid capital flight SEOUL, March 30 (AJP) - South Korean stocks are holding up — still more than 20 percent above year-end — but the won and bonds are taking a far heavier hit as capital flees amid the Middle East crisis, with little relief in sight unless Gulf shipping routes reopen. Seoul markets opened the week under pressure as the war in the Persian Gulf dragged into a second month with widening fronts and no clear resolution. Both the KOSPI and KOSDAQ fell about 3 percent Monday after Yemen’s Houthi rebels joined the Iranian-led front with attacks on Israel, prolonging disruptions in the Strait of Hormuz — a critical artery for global energy flows. The KOSPI has now shed nearly 6 percent over the past week, as shipments of Korea-bound crude — accounting for roughly 70 percent of imports — remain stranded. Still, equities have fared better than other key financial assets. The Korean won has weakened to its lowest level since March 2009, during the global financial crisis. The dollar has gained about 5 percent against the won this year, compared with just 2.3 percent versus the yen. On Monday, the dollar closed at 1,515.7 won, up 5.3 percent from end-February when the U.S. military campaign in Iran began — roughly double the 2.6 percent rise in the dollar index over the same period. The average exchange rate for March approached 1,490 won per dollar, dealing as the fourth-steepest monthly depreciation on record for the won. With the top three occurring during the 1997–98 Asian financial crisis, the current slide ranks as the second-most severe in practical terms. Capital flight has been a key driver. Foreign investors sold a net 36.4 trillion won worth of local equities in March alone, bringing total outflows for the first quarter to a record 65 trillion won. Bond markets are also flashing stress signals. The three-year government bond yield rose to 3.542 percent on Monday, up 50 basis points from a month earlier and nearly 60 basis points from year-end. The 10-year yield eased slightly to 3.89 percent after breaching 3.9 percent — levels last seen during the peak of the post-pandemic tightening cycle in late 2023. Expectations that Korea’s inclusion in the World Government Bond Index (WGBI) from April would help stabilize markets have largely faded amid the twin shocks of war and supply disruptions. “WGBI inclusion is a process that unfolds over several months, not something that delivers immediate impact,” said Lee Seok-jin, a manager at Hana Bank’s FX Platform Division. “In a wartime scenario like the current one, it is difficult to expect meaningful short-term effects.” Moon Hong-cheol, a researcher at DB Financial Investment, said the benefits of WGBI inclusion had already been priced in, with external shocks now dominating market movements. Even policy efforts are struggling to shift sentiment. Brokerages have rolled out Reshoring Investment Accounts (RIA) ahead of the expected passage of the government’s “Three FX Stability Acts” on March 31, but analysts remain skeptical. “The RIA is merely a temporary incentive,” Moon said. “The instability in the Korean market and the won ultimately stems from structural fundamentals, including demographic decline and weakening confidence in the currency.” “Stopgap measures risk undermining trust rather than restoring it.” 2026-03-30 17:49:44
  • Korea to adopt a new overnight repo benchmark
    Korea to adopt a new overnight repo benchmark SEOUL, March 30 (AJP) -South Korea will overhaul its benchmark interest rate system, phasing out vulnerable quote-based rates and shifting to a transaction-based standard to prevent manipulation risks and strengthen market credibility. The Financial Services Commission (FSC) finalized the reform plan Monday at a joint meeting with the Bank of Korea (BOK) and the Financial Supervisory Service (FSS), marking one of the most comprehensive changes to the country’s rate-setting framework in decades. At the center of the reform is the transition to the Korea Overnight Financing Repo Rate (KOFR), a risk-free benchmark based on actual overnight repo transactions backed by government securities. Unlike existing quote-based rates, KOFR is calculated from real trades, making it more transparent and resistant to manipulation. The move reflects lessons from the 2012 global LIBOR scandal, when major banks were found to have manipulated benchmark rates used to price trillions of dollars in loans and derivatives. South Korean authorities see structural similarities in their own system, where the Korea Interbank Offered Rate (KORIBOR) is also based on bank-submitted quotes rather than transactions. “If we remain complacent with familiar practices, it could eventually lead to financial accidents,” FSC Vice Chairman Kwon Dae-young said, stressing that maintaining trust in benchmark rates is a core responsibility of the financial sector. Under the plan, banks will in principle stop issuing new KORIBOR-based loans starting in April 2027. Existing loans will remain valid until maturity, but borrowers will be encouraged to switch to alternative benchmarks such as COFIX or bank bond rates when renewing contracts. The CD rate, another widely used benchmark, will also be gradually phased out. Authorities plan to remove its designation as a “key benchmark” under relevant law by the end of 2030, signaling a clear shift away from legacy pricing standards. Both KORIBOR and CD rates have been criticized for relying on limited or non-transactional data, making them vulnerable to distortions and declining in relevance as market structures evolve. The government aims to establish KOFR as the core benchmark across financial markets, from derivatives to bonds and lending. To accelerate adoption, authorities raised the target share of KOFR-based transactions in the Overnight Index Swap (OIS) market to 70 percent by 2030, up from the previous 50 percent goal. In the floating-rate note (FRN) market, banks will aim to issue 50 percent of new products based on KOFR by mid-2031. Policy lenders such as Korea Development Bank and Industrial Bank of Korea will lead the transition by launching a combined 1 trillion won ($730 million) in KOFR-linked loan products in the second half of this year. Authorities also plan to provide incentives, including incorporating KOFR-based activity into central bank operations assessments, to encourage faster market adoption. Officials framed the reform as a preemptive move to strengthen financial infrastructure before risks materialize. Benchmark rates serve as the backbone of financial markets, underpinning loans, bonds and derivatives. When their credibility is compromised, the impact can spread quickly across the entire system, ultimately affecting consumers. The reform also comes amid heightened market volatility linked to geopolitical tensions, reinforcing the urgency of building a more resilient and globally aligned rate system. BOK Deputy Governor Park Jong-woo described the clear timeline for phasing out legacy benchmarks as “a significant milestone” in aligning Korea’s financial markets with global standards. While the transition is expected to take several years, authorities signaled that this marks the beginning — not the end — of broader efforts to modernize Korea’s financial infrastructure. 2026-03-30 15:40:47