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Korea's Gen Z is running out of first-job options SEOUL, September 09 (AJP) - Gen Z may be an unlucky lot. The pandemic stole much of their college life, and the shift to artificial intelligence is now stripping away some of their first chances to gain real work experience. Lee Jae-hong, 27-year-old living in Seoul with his parents, has been applying jobs for two years, and this year, he finds fewer places to apply. "I feel like standing nowhere. I've started hard all my life and graduated from a decent school. But I cannot even pass the paper work," he said, adding out of his class 2024 just one landed a job. South Korea's youth employment fell by 143,000 from a year earlier in August, extending its decline to a 46th consecutive month. The employment rate for people aged 15 to 29 dropped 1.0 percentage point to 44.1 percent. The frustration is also showing up politically. President Lee Jae Myung's approval rating fell to 40 percent in the latest Gallup Korea poll, with support weakest among people in their 20s, where just 25 percent rated his performance positively against 51 percent negatively. Banks and asset managers — traditionally popular destinations for young humanities graduates — have joined the pullback. They are narrowing traditional entry-level pathways as artificial intelligence takes over routine junior work and employers increasingly favor recruits who arrive with technology skills and experience. The youth population itself has been shrinking, but demographics do not fully explain the weakness. The employment rate also declined, indicating that employment fell faster than population alone would imply. Inside financial companies, employees say the profile firms want has changed. “We increasingly prefer experienced hires with knowledge of data-analysis tools or development,” a junior-level employee at an asset management firm said. “Even writing prompts well has become a skill.” The employee spoke on condition of anonymity because he was discussing internal hiring and personnel practices. Asset managers still recruit junior and associate-level workers, he said, but candidates trained only in conventional financial analysis increasingly compete with workers who combine finance with data, development or AI skills. Firms also value client-facing and business-development abilities that usually take years to build, giving experienced hires another advantage. “For a company, it can simply be more efficient to put an experienced person on the job who can win the contract,” the employee said. Here comes the paradox. Employers want experience, but the jobs that once allowed workers to acquire it are becoming scarcer. A digital-planning official at a commercial bank described a similar shift. “The traditional route of training juniors has almost disappeared,” the official said. New bank employees once screened loan-review documents, compiled basic data and drafted preliminary risk reports, the official said. AI models and robotic process automation (RPA) can now perform much of that work within seconds. “If AI produces the draft, what you need is someone who can judge whether it is right or wrong,” he said. “From the organization's perspective, there is less reason to spend time and money teaching someone everything from the beginning.” The official asked not to be named, citing the sensitivity of internal personnel matters. Banks have not stopped hiring graduates, but recruitment has shifted away from large pools of generalist employees toward workers with specialized skills. South Korea's four largest commercial banks — KB Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank — hired 485 entry-level employees in the first half of 2026, down 18.5 percent from 595 a year earlier. Banks have expanded hiring in AI, IT, data analysis and platform development. Mobile banking and branch reductions have weakened demand for traditional generalist staff. The bank official said firms also increasingly recruit experienced fintech workers who understand both technology and financial services. Those candidates have typically already moved beyond the entry level. The pattern resembles a broader shift identified by the Bank of Korea. Youth employment fell by 285,000 between June 2022 and June 2026, according to a BOK study. Industries highly exposed to AI accounted for 268,000, or 94 percent, of the decline. Youth employment fell particularly sharply in information services, publishing, computer programming and professional services, while employment among workers in their 50s continued to increase in the same highly exposed industries. The BOK described the pattern as consistent with “seniority-biased technological change,” in which technology can reduce demand for tasks traditionally assigned to less-experienced workers while increasing the value of experienced employees who can supervise, verify or complement AI. The central bank cautioned, however, that the concentration of job losses in AI-exposed industries does not establish that AI caused the decline. Recent labor data also suggest weak youth employment cannot be explained simply by young people abandoning the labor market. South Korea's broad labor-underutilization rate fell to 7.6 percent in August from 8.2 percent a year earlier. The rate for people aged 15 to 29 edged up to 15.4 percent from 15.3 percent. At the same time, the number of young people classified as “resting” fell by 51,000 to 395,000. Among people in their 20s, the number fell by 58,000, and the data indicate that youth employment weakness cannot be reduced solely to withdrawal from the labor market. Across all age groups, the number of unemployed people who had never previously held a job rose by 9,000, or 28.7 percent, to 39,000 in August. The figure is not limited to young people, but it provides another measure of difficulty at the entry point of the labor market. Young Koreans are also taking nearly a year on average to secure their first paid job after leaving school. Among young people whose first job after graduation or leaving school was paid employment, the average wait was 11.2 months in May, according to the Ministry of Data and Statistics. Employment-insurance data show a similar age divide. Overall manufacturing enrollment returned to growth in August for the first time in 15 months. The number of insured workers aged 29 or younger fell by 55,700 across industries and by about 23,000 in manufacturing. AI alone does not explain South Korea's youth-employment weakness. Demographics, industry conditions and broader changes in corporate hiring all play a role. The interviews, however, point to a specific pressure on the first rung of the career ladder. Routine work once assigned to inexperienced employees is increasingly automated. Employers place a higher premium on workers who already understand the business and can verify AI output. For young job seekers, the challenge is increasingly how to gain the experience companies demand when fewer companies are willing to provide the first opportunity. AJP Takeaways - South Korea's youth employment fell for a 46th consecutive month in August, while the youth labor-underutilization rate rose to 15.4 percent. - South Korea's finance firms are increasingly favoring employees with AI, data and industry experience, according to interviews with workers at an asset manager and a commercial bank. - South Korea's four largest commercial banks hired 485 entry-level employees in the first half of 2026, down 18.5 percent from a year earlier. - The Bank of Korea found that AI-high-exposure industries accounted for 268,000 of the 285,000 decline in youth employment over four years, while cautioning that the relationship does not prove causation. September 9, 2026 1 -
KOSPI Recovers Above 7000 Amid Semiconductor Stabilization and Battery Strength The KOSPI opened higher on September 8, recovering above the 7000 mark during trading. This is the first time the index has surpassed 7000 since August 18. Following a sharp rise the previous day, Samsung Electronics and SK Hynix entered a period of stabilization, while secondary battery stocks and some semiconductor materials showed strength.As of 9:05 a.m., the KOSPI was up 26.97 points (0.39%) at 7022.36, having briefly reached 7047.91 during the session.In the securities market, individual investors have net purchased 59.4 billion won, while foreign and institutional investors have net sold 71.5 billion won and 5.7 billion won, respectively.Among the top market capitalization stocks, Samsung Electronics remained steady at 270,000 won, and SK Hynix also held at 1,783,000 won. LG Energy Solution (up 1.24%), Samsung Biologics (up 0.48%), and KB Financial (up 1.65%) saw gains, while Samsung Electro-Mechanics (down 1.79%), SK Square (down 0.62%), and Hyundai Motor (down 0.38%) faced declines.The KOSDAQ index rose by 6.01 points (0.73%) to 828.20. Individual investors net purchased 13 billion won, while foreign and institutional investors net sold 500 million won and 11.5 billion won, respectively.In the KOSDAQs top market capitalization stocks, JUSUNG Engineering increased by 4.43%. Other gainers included HPSP (up 3.56%), EcoPro (up 3.03%), IOTech (up 2.74%), EcoPro BM (up 2.72%), Simtec (up 2.59%), Rino Industry (up 2.49%), and Wonik IPS (up 2.21%).Meanwhile, U.S. markets were closed for Labor Day. European markets showed mixed results ahead of the European Central Banks (ECB) monetary policy meeting, influenced by rising international oil prices and government bond yields. The German DAX and the UK FTSE 100 fell by 0.15% and 0.08%, respectively, while the French CAC 40 and Euro Stoxx 50 rose by 0.33% and 0.17%.International oil prices increased amid ongoing military tensions between the U.S. and Iran, with Brent crude briefly surpassing $98 per barrel. Factors contributing to the rise included reduced shipping through the Strait of Hormuz and the OPEC Pluss decision to maintain existing policies.Seo Sang-young, a researcher at Mirae Asset Securities, stated, European government bond yields have risen as expectations for ECB interest rate hikes have intensified, particularly following the strong performance of far-right parties in Germanys regional elections, highlighting concerns over fiscal deficits. We believe that the ECBs influence and political issues will continue to impact the market in the second half of the year.He added, The dollar weakened against other currencies due to the strength of the yen, which has been bolstered by expectations of a faster pace of interest rate hikes by the Bank of Japan and the emergence of new government policies in Japan. September 8, 2026 0 -
Market Preview: U.S. Holiday and Mixed European Markets Amid Semiconductor Profit-Taking U.S. markets were closed for Labor Day, while European stocks showed mixed results amid anticipation of the European Central Bank (ECB) monetary policy meeting, rising international oil prices, and concerns over increasing government bond yields in major countries. The domestic market is expected to see profit-taking in semiconductor stocks, which surged the previous day.On September 8, financial investment industry sources reported that the German DAX and the UK FTSE 100 indices fell by 0.15% and 0.08%, respectively, while the French CAC 40 and Euro Stoxx 50 indices rose by 0.33% and 0.17%. European semiconductor stocks, including Infineon (up 6.91%) and ASML (up 2.25%), showed strength.International oil prices and government bond yields in Europe increased. Brent crude oil briefly surpassed $98 per barrel amid ongoing military tensions between the U.S. and Iran. The outlook for ECB interest rate hikes and concerns over budget deficits following elections in Germanys Saxony-Anhalt also contributed to upward pressure on bond yields.The domestic market may enter a consolidation phase early in the trading session, particularly in semiconductor stocks. As of 8:15 a.m. in the NXT pre-market, Samsung Electronics was trading at 269,500 won, down 0.19% (500 won) from the previous trading day. SK Hynix also recorded a decline of 0.17% (3,000 won), trading at 1,786,000 won. Other major semiconductor and technology stocks, including SK Square (-0.27%), Hanmi Semiconductor (-0.62%), and Samsung Electro-Mechanics (-0.55%), were also in the red.The previous day, the domestic market surged due to strong U.S. employment data for August, which raised concerns about a potential interest rate hike by the Federal Reserve in September, but was buoyed by optimism surrounding artificial intelligence (AI). Samsung Electronics and SK Hynix led the indexs rise, increasing by 5.7% and 8.3%, respectively.Han Ji-young, a researcher at Kiwoom Securities, stated, Today, we expect profit-taking to occur following yesterdays short-term surge, influenced by the direction of U.S. 10-year Treasury yields and news flow related to the U.S.-Iran situation, leading to sector differentiation in the market.Recently, the domestic market has shown clear sector rotation. Sectors that performed well last month, such as cosmetics, IT electronics, chemicals, and non-ferrous metals, have seen declines of 7.9%, 4.9%, 4.3%, and 4.0%, respectively, this month. In contrast, semiconductors, which fell by 1.5% last month, have risen by 5.2% as of September 7, placing them among the top-performing sectors, alongside energy, which rose by 5.7%.Notably, foreign investors net bought approximately 2.6 trillion won in the KOSPI, with 2.3 trillion won specifically in the semiconductor sector. Whether this buying trend continues during the price correction phase will be a key factor influencing semiconductor stock movements.A researcher noted, The important aspect is whether the continuity of foreign net buying is maintained during the price correction phase. We will also watch for sector rotation into other AI infrastructure sectors, such as IT hardware and power equipment, as well as consumer goods and shareholder return-related sectors, during this period of consolidation for semiconductors.They added, If this virtuous cycle of sector rotation continues, it will support our previously suggested scenario of the KOSPI breaking above the 7,000 mark in September and establishing a recovery path with higher lows.* This article has been translated by AI. September 8, 2026 0
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Chinese Stock Market Rises as Financial Institutions Announce $60 Billion Capital Increase On September 7, the Chinese stock market closed higher, buoyed by news that financial institutions are increasing their capital. The Shanghai Composite Index rose 0.07% to 3,932.70, the Shenzhen Component Index climbed 1.91% to 13,774.91, and the ChiNext Index surged 3.41% to 3,398.68.On September 6, the Chinese Ministry of Finance announced plans for an injection of 360 billion yuan (approximately $60 billion) into eight financial institutions. The institutions involved include the Industrial and Commercial Bank of China, Agricultural Bank of China, Export-Import Bank of China, China Export & Credit Insurance Corporation, China Life Insurance, Taikang Life Insurance, Peoples Insurance Company of China, and China Reinsurance Group. Chinese media interpreted this move as a measure to enhance the long-term capital supply capability of the stock market, beyond merely improving the financial structure of these institutions. The market particularly welcomed the capital increase for insurance companies, as Chinese authorities have been encouraging them to expand their investments in the stock market. According to Reuters, the stock holdings of Chinese insurance companies increased by 39% year-on-year to 5.7 trillion yuan. Thus, the capital increase by insurance companies has raised expectations for expanded stock investment capacity.Additionally, the Peoples Bank of China conducted a 500 billion yuan reverse repurchase operation for three-month maturities on the same day, which was also seen as a positive development. Chinese media described this as a measure to stably absorb and replace liquidity maturing in September. It is also interpreted as a signal that the central bank aims to maintain stable liquidity in the market.On this day, stocks related to optical modules (CPO) showed strong performance. Companies such as XunJieXing, QingShan Paper, and HuaShengChang hit their daily price limits. YinHe Securities stated, The computational capacity for training large AI models continues to expand, and the high-speed optical module chain is likely to be the most directly benefited sector. Furthermore, the strong performance of the optical communication sector in the U.S. stock market last Friday also contributed to the positive sentiment in the Chinese market.Grain stocks have also been rising consistently. Companies like YaSheng Group and Dunhuang Seed Industry reached their daily price limits. The World Meteorological Organization (WMO) predicted that the El Niño phenomenon would continue to strengthen, impacting global precipitation and temperature patterns significantly. Related weather risks are expected to persist until February 2027.On this day, the Peoples Bank of China set the yuans central parity rate against the dollar at 6.7795 yuan, an increase of 0.0008 yuan from the previous day, reflecting a 0.01% decline in the yuans value. September 7, 2026 1
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Korea's rate hikes lift delinquency risks for indebted homebuyers: BOK SEOUL, September 07 (AJP) -South Korea’s base rate has yanked up to 3.00 percent from 2.50 percent through two consecutive hikes after staying unchanged for more than a year and may rise further given the central bank’s inflation-focused bias, raising delinquency risks for highly leveraged mortgage households, a Bank of Korea (BOK) study showed Monday. A 1 percentage point increase in rates would raise the probability of delinquency among heavily indebted homebuying households by 0.81 percentage point within 12 months, according to an empirical study published in the latest BOK Issue Note. The study focused on households that bought homes between 2023 and 2025 and ranked in the top 10 percent for increases in principal and interest payments relative to income after the purchase, making them most vulnerable to higher interest rates. The BOK said delinquency risks among borrowing households overall would remain broadly stable under current rates, but some heavily indebted groups could be vulnerable to larger rate shocks. Financial stress could also spread between members of the same household. Among heavily indebted homebuying households, the probability that another member would become delinquent within 12 months after one member fell behind on payments was 8.8 percent. That was 1.9 times the 4.6 percent rate among households that already owned homes. The findings came from a new database covering about 2.06 million households and tracking their debt, assets, income and spending each month. The BOK built the database because traditional household debt analysis largely focuses on individual borrowers, even though families often make borrowing and saving decisions together. Looking at spouses and other family members together could therefore provide a clearer picture of a household's ability to repay its debts, the central bank said. Heavy repayment burdens were also found to squeeze consumption. The BOK estimated that household spending began to decline when the debt service ratio (DSR), which measures annual principal and interest payments relative to income, exceeded 46 percent. About 11.1 percent of indebted households were above that threshold in 2025. Among households in the lowest income quintile, the share rose to 14.5 percent in 2025 from 11.4 percent in 2021, pointing to increasing pressure on lower-income borrowers, according to the BOK. The study was released less than two weeks after the BOK raised its Base Rate by 25 basis points to 3.00 percent from 2.75 percent. The central bank said it was seeking to contain persistent inflation while remaining alert to financial stability risks. At its Aug. 27 policy meeting, the central bank said home prices in the Seoul metropolitan area continued to rise rapidly while household lending increased substantially. Bank household loans rose by 5.4 trillion won (about $4.0 billion) in July to 1,194.8 trillion won, according to BOK data released last month. Mortgage loans accounted for 3.4 trillion won of the increase as the effects of earlier growth in housing transactions around the capital region continued to feed into lending. The monthly increase in overall bank household lending had slowed from June but was still twice as large as a year earlier. The study also suggested that the headline size of household debt alone may not capture where financial vulnerabilities are concentrated. The BOK said monitoring should pay particular attention to heavily indebted homebuyers, the transmission of credit risk between household members and high repayment burdens among lower-income families. AJP Takeaways - Bank of Korea analysis found that families taking on large debts to buy homes were especially vulnerable to large interest rate increases. - South Korean households with heavy home loans showed a much higher risk of financial trouble spreading from one family member to another. - Bank of Korea findings were released after a Base Rate increase and during a period of rising household and mortgage lending. September 7, 2026 1 -
Bank of Korea: 1% Rate Hike Increases Default Risk for Borrowers Households that have heavily borrowed to purchase homes, known as young-gul households, are particularly vulnerable to rising interest rates. An analysis indicates that if interest rates rise by 1 percentage point, the default probability for these households increases by 0.81 percentage points. Additionally, if one member of the household defaults, the likelihood of other members defaulting is nearly double that of existing homeowners.The Bank of Korea revealed these findings on September 7 in its issue note titled Household Debt Risk Assessment Using Household Database. According to the central banks stress test results, a 100 basis point (1 percentage point) increase in interest rates would raise the default probability for high-borrowing households by 0.81 percentage points.High-borrowing households are defined as the top 10% of households that experience the greatest increase in repayment burden relative to their income when purchasing homes. Considering that the actual default rate for existing homeowners was 2.01% at the end of 2025, this represents a significant increase.The potential for credit risk transfer within households is also high. In high-borrowing households, if one member defaults, the probability of another member defaulting within 12 months is 8.8%, compared to 4.6% for existing homeowners, indicating a 1.9-fold increase.Jang Hoon, head of the Financial and Monetary Research Division at the Bank of Korea, stated, In high-borrowing households, the risk of credit issues spreading beyond the individual borrower to the entire household increases with rising interest rates. Although high-borrowing households only account for about 30% of the lowest income brackets, they experience shocks similar to those of low-income households.However, when considering all borrowing households, the impact of rising interest rates appears relatively limited. A 25 basis point increase in rates is projected to raise the household default rate from the current 3.35% by 0.27 percentage points. The Bank of Korea assessed that, overall, the default rate remains stable despite rising interest rates.Interest rate sensitivity is particularly pronounced among low-income households and self-employed individuals. The pre-rate increase default rates for the lowest income brackets (1st and 2nd) were 5.45% and 4.38%, respectively, exceeding the overall average of 3.35%. After 12 months following a rate increase, these rates are expected to rise by 0.48 and 0.40 percentage points, respectively. Self-employed individuals also had a pre-rate increase default rate of 4.47%, which increased by 0.32 percentage points after the rate hike.The issue of household debt constraining consumption has also been confirmed. A debt service ratio (DSR) exceeding 46% is associated with a decrease in consumption. As of 2025, it is estimated that 11.1% of households with debt had a DSR above this threshold.Notably, the debt repayment burden has increased among low-income households. The proportion of households in the lowest income bracket with a DSR exceeding 46% rose from 11.4% in 2021 to 14.5% in 2025. Lee Yoon-ha, head of the Household Debt Microstatistics Team at the Bank of Korea, noted, The debt burden for low-income households is more significant when assessed at the household level rather than the individual level.The Bank of Korea emphasized the need for a household-level approach to assess and manage household debt risks, considering the income, assets, and debts of all household members. It highlighted the importance of being aware of the default risks associated with rising interest rates for high-borrowing households, the potential for credit risk transfer among household members, and the high debt repayment burdens faced by low-income households. September 7, 2026 1
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Global Financial Markets on Edge as U.S.-Iran Conflict Drives Oil Prices Higher As the military conflict between the United States and Iran continues, volatility in global financial markets is increasing ahead of the U.S. consumer price index (CPI) release for August and key monetary policy meetings in major economies. With escalating tensions in the Middle East causing a surge in international oil prices, there is growing concern that higher-than-expected inflation in the U.S. could lead to an increased likelihood of interest rate hikes by the Federal Reserve.According to the International Financial Center, Brent crude oil prices rose by 7.80% to $96.28 per barrel on September 4, compared to the previous weekend. The ongoing military conflict has significantly reduced the number of vessels passing through the Strait of Hormuz, a crucial oil transport route. Market analysts are increasingly worried about potential disruptions to oil supply, as the likelihood of a swift resolution to the conflict diminishes.OPEC+, the coalition of major oil-producing countries, has decided to maintain its current production policy in October. However, due to the impact of the Middle Eastern conflict, actual supply levels are falling well short of targets, suggesting continued uncertainty in oil prices.The upcoming U.S. CPI report, scheduled for release on September 11, is expected to be a key factor influencing the Feds monetary policy direction. Analysts predict that the headline CPI will show a year-over-year increase of 3.4%, remaining unchanged from the previous month, while the month-over-month increase is expected to rise from 0.1% to 0.4%. Core CPI is projected to increase by 2.4% year-over-year and 0.2% month-over-month. Given the persistent inflation concerns, the Feds interest rate trajectory may shift based on the detailed indicators.Additionally, the European Central Bank (ECB) monetary policy meeting scheduled for September 10 is another variable to watch. The market anticipates a 0.25 percentage point increase in key policy rates, with attention focused on whether further rate hike signals will be issued.The strengthening of the Japanese yen has also emerged as a factor that could influence global capital flows. The yen appreciated by 2.45% against the dollar last week, reaching 156.26 yen. Factors contributing to the yens strength include expectations of further interest rate hikes by the Bank of Japan, potential selling of foreign bonds by Japanese investors, and a narrowing interest rate gap between the U.S. and Japan.If the interest rate gap between the U.S. and Japan continues to narrow, there may be a reduction in yen carry trades. Market estimates suggest that positions betting on a weaker yen could amount to as much as 17 trillion yen, and if these positions are fully liquidated, the dollar-yen exchange rate could drop to between 142 and 146 yen. Nomura has analyzed that, in an extreme scenario, the Bank of Japan could implement three consecutive interest rate hikes.* This article has been translated by AI. September 7, 2026 0
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UPDATE: Korea's H1 C/A surplus second only to China *Updated with additional information and comments SEOUL, September 04 (AJP) - South Korea's current account surplus ranked second only to China's among major economies in the first half and will likely to keep up the rank rest of the year as July delivered the second-largest monthly surplus on record, the central bank said Friday. The July surplus came to $42.08 billion, down from June's record $49.73 billion but above $40 billion for a second month, extending the surplus run to 39 consecutive months, preliminary Bank of Korea (BOK) data showed. Yoo Seong-wook, head of the BOK's Financial Statistics Department, said Korea's first-half surplus of $191.01 billion trailed only China's and exceeded those of Germany, Japan and Taiwan. Official data for the same period put China's surplus at $379.4 billion, Germany's at the equivalent of roughly $124 billion, Taiwan's at $121.03 billion and Japan's at about $110 billion. The January-July surplus nearly quadrupled to $233.09 billion from $59.82 billion a year earlier and was already about 1.9 times the $123.05 billion recorded in all of 2025. The BOK last week raised its 2026 current account surplus forecast to $450 billion from $250 billion, citing stronger semiconductor exports and a wider goods surplus. Yoo said the annual surplus was likely to come broadly in line with the forecast if monthly surpluses averaged about $43.4 billion over the remaining five months, with the final outcome hinging largely on the semiconductor cycle. He said the won's recent appreciation would have only a limited impact on exports because the increase was being driven mainly by structural AI-related demand for semiconductors rather than exchange-rate competitiveness. The unresolved Middle East conflict remained another risk because higher prices for crude oil and other raw materials could increase Korea's import bill, Yoo said. The goods account logged its second-largest surplus of $40.43 billion as exports rose 65.3 percent from a year earlier to $100.45 billion, while imports increased 21.7 percent to $60.02 billion. Yoo said exports and the goods surplus often decline from June to July because companies tend to concentrate shipments in June when managing their first-half export performance. On a seasonally adjusted basis, the current account surplus declined 8.0 percent to $40.89 billion from $44.43 billion, compared with a 15.4 percent drop in the unadjusted figure. Customs-cleared exports reached $98.96 billion as information technology shipments jumped 140.6 percent and non-IT exports increased 18.3 percent. Semiconductor exports surged 176.3 percent to $41.17 billion, accounting for 41.6 percent of total customs-cleared exports. Raw material imports increased 29.1 percent on higher purchases of crude oil, gas and coal, while capital goods imports rose 36.7 percent on increased purchases of semiconductors and chipmaking equipment. Consumer goods imports fell 3.0 percent, marking their first decline in 15 months. The services account deficit widened to $1.97 billion from $1.29 billion as the travel balance swung to a $340 million deficit from a $440 million surplus. The BOK attributed the reversal to the peak summer travel season and increased outbound travel following the designation of Constitution Day as a temporary public holiday. The primary income surplus increased to $4.35 billion from $3.27 billion as the dividend income surplus reached $3.83 billion. Park Seong-gon, head of the BOK's Balance of Payments Team, attributed the increase mainly to higher dividend receipts following improved earnings at semiconductor companies' overseas sales subsidiaries. The financial account recorded its second-largest net asset increase of $40.32 billion. Foreign direct investment in Korea decreased by $780 million in July, reflecting reductions in intercompany trade credit and other transactions, according to the BOK. Foreign portfolio investment in Korean securities increased by $8.17 billion as equity investment rose by $5.98 billion and debt investment gained $2.19 billion, although bond inflows slowed as arbitrage incentives narrowed. Foreign equity investment turned positive for the first time in six months after falling by a record $31.61 billion in June. Yoo said the rebound reflected SK hynix's American depositary receipt issuance and reduced selling of domestically issued shares, adding that more data were needed to determine whether the improvement would continue. Despite the July rebound, foreign equity portfolio investment in Korea remained down a cumulative $100.30 billion in the first seven months. A $19.72 billion increase in foreign investment in Korean debt securities partly offset the equity outflow, leaving total foreign portfolio investment in domestic securities down $80.58 billion over the period. Korean residents increased their overseas equity investment to $12.33 billion from $7.53 billion in June, more than twice the foreign investment in Korean equities during July. Overall portfolio investment recorded a $5.40 billion net asset increase, while other investment posted a $27.56 billion increase as loan assets rose and borrowing liabilities declined. AJP Takeaways - South Korea's current account surplus reached $42.08 billion in July, the second-largest monthly figure on record, while its $191.01 billion first-half surplus trailed only China's among major economies. - The BOK expects the annual surplus to broadly meet its upgraded $450 billion forecast if monthly surpluses average about $43.4 billion over the remaining five months. - The BOK expects the won's appreciation to have a limited export impact because AI-related semiconductor demand remains the dominant driver, although the chip cycle and raw material costs remain key risks. - Foreign equity investment rebounded by $5.98 billion in July after six months of declines but remained down a cumulative $100.30 billion in the first seven months. September 4, 2026 0 -
AI spending binge steepens Korea's bond curve SEOUL, September 03 (AJP) - As the race for AI supremacy sends government and corporate spending into the stratosphere, investors are demanding more to lend for decades — a shift showing up starkly in South Korea, where yields have risen progressively faster toward the long end of the government bond curve. The yield chart over the past year shows an increasingly steep repricing toward longer maturities. The 30-year yield has climbed the most, touching a record 4.751 percent in August, while shorter-dated yields remain below peaks reached during the global tightening shock of 2022. The pattern matters because the far end of the curve says more than where traders think the Bank of Korea will set interest rates over the next year or two. It reflects what investors demand to lock up money for decades amid rising capital needs, uncertainty over inflation and fiscal policy, and questions over who will absorb long-term debt. Korea adds a domestic wrinkle to that global story. Insurers, historically some of the country's most dependable buyers of ultra-long government bonds, have less structural need to keep accumulating them after reducing mismatches between long-term assets and liabilities under new accounting and capital rules. The combination is making Korean bonds cheaper, but not yet cheap enough to bring those long-term buyers back in force. Government bonds staged a modest recovery Thursday after a broad selloff a day earlier. The three-year Korean government bond yield fell 2.0 basis points from Wednesday's close to 3.910 percent in morning final quotations from KOFIA. The benchmark 10-year yield declined 3.7 basis points to 4.381 percent, while the 30-year eased 1.8 basis points to 4.639 percent. The pullback did little to change the broader picture. The three-year yield has risen about 96 basis points from 2.95 percent at the end of 2025, while the 10-year has climbed about 99 basis points from 3.39 percent. The move becomes much larger at the far end. The 30-year yield has surged about 138 basis points from 3.258 percent at the end of last year, reaching an all-time high of 4.751 percent on Aug. 18 before easing. The KOFIA chart makes the shift particularly visible. All four maturities have moved higher over the past year, but the spread between shorter and longer yields has widened as the selloff increasingly concentrates at the far end of the curve. That is different from a simple policy-rate shock. During the 2022 global tightening cycle, investors rapidly repriced expectations for aggressive rate increases by the BOK and U.S. Federal Reserve. The Korean three-year yield jumped 34.9 basis points in a single session on Sept. 26, 2022, to 4.548 percent, while the 10-year gained 22.3 basis points to 4.335 percent. The 10-year later reached 4.632 percent on Oct. 21, while the three-year stood at 4.495 percent. Today's three-year yield remains clearly below that period's peak. The 10-year has returned to similar territory, while the 30-year has gone further and set a record. The contrast suggests today's repricing is less concentrated on the next few BOK decisions and more heavily influenced by the price investors place on holding duration for decades. Kim Myung-sil, an analyst at iM Securities, said the recent market has been notable because yield increases have been concentrated at longer maturities rather than spread evenly across the curve. Supply and demand have played a larger role in the bear steepening than monetary policy alone, she said. Global borrowing gets more expensive Korea's move forms part of a much broader reassessment of long-term debt. Governments are spending heavily on defense, energy security and industrial policy, while the global AI race is demanding extraordinary investment in semiconductor plants, data centers, electricity generation, transmission networks and other infrastructure. Technology companies are simultaneously committing vast amounts of capital to AI computing capacity, adding private-sector demand for long-term financing to already-heavy public borrowing. Bond investors are being asked to provide more capital just as persistent inflation uncertainty has made them less willing to assume that interest rates will eventually return to the exceptionally low levels of the pre-pandemic era. That pressure has shown up most visibly in long maturities. The U.S. 10-year Treasury yield eased to around 4.78 percent in Asian trading Thursday after retreating from a multiyear high reached a day earlier. Japan's 10-year government bond yield fell 4.5 basis points to 2.965 percent after moving above 3 percent earlier this week for the first time since 1996. Korea and Japan, however, have experienced considerably larger increases this year than the United States. Korea's 10-year yield is about 99 basis points above its end-2025 level. Japan's has climbed roughly 89 basis points from 2.075 percent, compared with an increase of around 60 basis points in the U.S. 10-year Treasury from 4.18 percent. Japan matters well beyond its own market. For decades, low domestic yields encouraged Japanese banks, insurers and asset managers to send capital abroad in search of returns. Higher yields at home reduce that incentive, potentially weakening a major source of marginal demand for U.S. Treasuries and other overseas bonds. That in turn adds to the competition facing Korea. When U.S. and Japanese bonds offer increasingly attractive returns, Korean debt must compete harder for global capital, particularly at maturities where investors assume greater interest-rate and currency risk. Renewed Middle East tensions have intensified those pressures this week. Higher oil prices have revived concern that energy costs could keep inflation elevated, helping push government borrowing costs to multiyear or multidecade highs across several major markets before Thursday's partial recovery. Korea's traditional buyer retreats Global forces alone, however, do not explain why Korea's far end has moved so aggressively. The structure of domestic demand has changed. Korean insurers have traditionally been natural buyers of 20- and 30-year government bonds because their liabilities — particularly life insurance obligations — can stretch decades into the future. Ultra-long bonds allowed them to better match the duration of those liabilities with their assets. The introduction of IFRS 17 and the Korean Insurance Capital Standard, or K-ICS, in 2023 accelerated that adjustment. As insurers made progress in reducing their asset-liability duration mismatches, their need to continuously add ultra-long government debt weakened. That removes a buyer that historically purchased long bonds partly because of balance-sheet requirements rather than simply because yields looked attractive. The implication is straightforward: as structural demand weakens, prices may need to fall further — and yields rise further — before more price-sensitive investors step in. Tuesday's 30-year bond auction illustrated that tension. The government offered 2.5 trillion won ($1.8 billion) of 30-year bonds, 300 billion won less than the previous month's competitive offering. Bids totaled 5.417 trillion won, equivalent to 216.7 percent of the planned amount, and the full amount was awarded at 4.630 percent. The auction was comfortably covered but failed to generate lasting relief for the long end. That distinction matters. The issue is not whether an individual bond sale can attract enough bids, but the yield required for investors to absorb long-duration debt consistently. Bigger budget, but not a classic supply shock South Korea's fiscal expansion has added another layer of uncertainty, although the numbers make it difficult to blame the selloff on a straightforward flood of new government borrowing. The Cabinet this week approved an 820.9 trillion won ($600 billion) spending plan for 2027, up 12.8 percent from this year's original budget. The expansion comes as the government seeks to invest heavily in growth industries and support the economy, helped by booming semiconductor-related tax receipts. National tax revenue is projected at 584.4 trillion won. Despite the larger budget, the government plans to reduce Korean government bond issuance next year. Gross issuance is projected to fall to 222.8 trillion won from 225.7 trillion won, while net issuance is expected to decline more sharply to 96.3 trillion won from 109.4 trillion won. That makes today's selloff different from a conventional supply shock in which an announcement of sharply higher borrowing immediately overwhelms bond demand. What matters for the long end is broader. A 30-year investor is not merely assessing next year's bond issuance. The investor is taking a view on decades of future spending, tax revenue, inflation, economic growth and the amount of compensation required to accept the risk that those assumptions change. The surge in government and corporate spending worldwide therefore matters even when Korea itself is not immediately issuing more debt. President Lee Jae Myung acknowledged the higher cost of capital during a Cabinet meeting at the Blue House on Tuesday. "The rise in interest rates is unavoidable now," Lee said, urging fiscal policy to limit the burden on vulnerable households and prevent damage to growth potential. His remarks did not trigger the bond selloff. Global yields and pressure at Korea's long end were already building. Not another 1997 The scale of the increase has inevitably invited comparisons with previous periods of Korean financial stress, but the similarities are limited. During the 1997-98 Asian financial crisis, the three-year government bond yield averaged 12.26 percent in 1997 and 12.94 percent in 1998, according to National Assembly Budget Office data based on Bank of Korea statistics. A comparable 10-year benchmark did not yet exist. Those double-digit rates accompanied a collapse in external financing and severe currency stress. The 2008 global financial crisis produced another different pattern. Once recession and financial-stability risks overtook inflation concerns, aggressive policy easing ultimately pushed government bond yields lower. Neither dynamic describes today's market. The won closed Thursday's daytime trading at 1,359.3 per dollar, 9.4 won stronger than Wednesday's close of 1,368.7, despite the sharp rise in Korean bond yields a day earlier. That makes it difficult to characterize the bond selloff as a broad loss of confidence in Korean assets. Domestic inflation offers only a partial explanation as well. Consumer prices rose 3.1 percent in August from a year earlier, but the government estimated that inflation would have been around 2.5 percent without a temporary base effect caused by mobile-phone fee discounts a year earlier. Rather than a currency crisis or sudden domestic inflation shock, the market is increasingly pricing the cost of committing capital for a long period in a world where that capital is in greater demand. What matters next That makes the 20- and 30-year segments important gauges of whether the pressure is beginning to ease. Shorter yields could decline if investors become confident that the BOK's tightening cycle is approaching an end. The long end requires more. A sustained recovery would likely need some combination of stabilization in U.S. and Japanese long-term rates, greater confidence over Korea's long-run fiscal and inflation trajectory and stronger demand from insurers and other institutional investors. Adjustments to the government's ultra-long issuance mix could also help. Until then, falling bond prices alone may not be enough to bring traditional buyers back. The question facing Korea is increasingly not simply how high its central bank will take interest rates, but how much investors must be paid to finance an era of increasingly expensive ambitions — from AI and industrial policy to infrastructure and defense — for decades to come. AJP Takeaways Korea's three-, 10- and 30-year government bond yields have risen about 96, 99 and 138 basis points from end-2025 levels, with the selloff becoming more pronounced toward longer maturities. The rise reflects a broader global repricing of long-term debt as governments and companies compete for capital amid heavy spending on AI, infrastructure, defense and energy security. Weaker structural demand from Korean insurers has added pressure at the far end of the curve after new accounting and capital rules reduced their need to keep accumulating ultra-long government bonds. The selloff differs from past Korean financial crises: the won remains firm and external-funding stress is absent, pointing more to long-duration repricing than a broad loss of confidence in Korean assets. September 3, 2026 1 -
U.S. Treasury Secretary Calls for Japan to End 'Reflation Policy' Scott Vessent, the U.S. Treasury Secretary, has publicly called on Japan to halt its reflation policy, which combines fiscal expansion with monetary easing. Previously, he had only hinted at expectations for the Bank of Japan (BOJ) to raise interest rates in response to a stronger yen through media interviews. However, he has now demanded a change in the core economic policies of the Takaiichi government. The response from Japan to this public pressure from the U.S. is being closely watched.According to the Yomiuri Shimbun, Vessent made his remarks on September 1 during a press conference following the G20 finance ministers and central bank governors meeting in Asheville, North Carolina. He specifically called for Japan to end the reflation policy, effectively urging the Takaiichi government to revise its active fiscal stance and the BOJ to raise interest rates to correct the yens weakness.To support his argument, Vessent referenced Abenomics, the economic policy initiated by former Prime Minister Shinzo Abe. He described Abenomics as a successful strategy that led Japan out of deflation, asserting that if inflation had reached 2%, the reflation policy had already achieved its goals. He emphasized that it is now time to consider the outcomes of that success, stating, Now is the time for Takaiichinomics, urging a policy shift to align with the changed economic circumstances. Vessent referred to Prime Minister Takaiichis economic policy, commonly known as Sanaenomics, as Takaiichinomics.This is not the first time Vessent has expressed such views. The New York Times reported that prior to this public criticism, he had dined for over two hours with Finance Minister Satsuki Katayama at a high-end restaurant in Tokyo on May 11, where he voiced dissatisfaction with the Takaiichi governments economic policies. He reportedly questioned the combination of pushing for fiscal expansion while demanding the BOJ maintain low interest rates, asking, Why is independence not granted to the BOJ?The Yomiuri Shimbun noted that Vessents shift from private dissatisfaction to public pressure reflects growing concerns about Japans fiscal policy and its side effects. The U.S. government is also wary of the potential spillover effects of rising long-term interest rates in Japan on U.S. financial markets. The yield on U.S. 10-year Treasury bonds has risen to 4.8%, the highest level since January 2025. With the midterm elections approaching in November, the Trump administration is particularly concerned that rising long-term rates could increase mortgage rates, burdening voters.Japanese Governments Response DiffersIn contrast, the Japanese government has provided a different explanation regarding Vessents comments. According to the Nihon Keizai Shimbun (Nikkei), Finance Minister Katayama stated at a press conference on September 1 that there had been surprisingly little concern expressed by other countries, including the U.S., regarding Japans fiscal policy. He cited that Japan has the smallest ratio of annual fiscal deficit to GDP among the G7 nations. He claimed that the Takaiichi government has garnered support from participants, including Vessent, by explaining its commitment to balancing economic growth with fiscal sustainability. While the U.S. has called for a policy shift, Japan has portrayed that it has received understanding for its policy direction from the U.S.BOJ Governor Ueda also drew a line regarding the U.S. demands. At a press conference on September 1, when asked if there was a need to respond more strongly to currency movements, he replied, I do not think there has been such a change. However, according to the Asahi Shimbun, when asked about the possibility of raising rates at the monetary policy meeting on September 17-18, Ueda stated, I want to discuss it thoroughly at every meeting, including the next one, leaving the door open for a rate hike. The Nikkei reported that the markets expectation for a September rate increase stood at 97% as of the afternoon of September 2.As the differences in perception between the U.S. and Japan become evident, the pressure from the U.S. may not end with this press conference. The Yomiuri Shimbun speculated that depending on future currency and bond market trends, Vessent may continue to call for a policy shift from Japan ahead of the next G20 meeting in October. However, some analysts suggest that rather than a significant immediate change in policy implementation, there may be a shift in the way Japan explains its policies externally. Toru Suehiro, chief economist at Daiwa Securities, noted that the Takaiichi government might explain that it has already moved beyond the reflation policy stage, while gradually downplaying the active fiscal stance and placing greater emphasis on market stability and fiscal discipline. September 3, 2026 1
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Bank of Korea Halts Publication of Foreign Exchange Reserves Rankings The Bank of Korea has announced it will stop publishing rankings of foreign exchange reserves, citing the difficulty in attributing significance to rankings that are unrelated to external soundness.In a press release on September 3, the Bank stated, The international ranking of foreign exchange reserves is a simple comparative statistic that does not control for the heterogeneity of economic size and external positions among countries, adding that it has minimal analytical value.On the same day, the Bank disclosed the size of its foreign exchange reserves but removed the country-specific ranking data that had been provided monthly. This marks the first time in 25 years and six months that South Koreas global ranking has not been presented separately since the end of February 2001.In 2001, the Bank first published the names and sizes of the top 10 countries by foreign exchange reserves. Until last month, it had included South Koreas ranking alongside the reserves of major countries in its press releases.However, the Bank did not inform the public about this change or its rationale through the main text of the data, additional explanatory materials, or briefings.The Bank clarified, It is not true that we deleted the foreign exchange reserves ranking from our press release to hide unfavorable information from the foreign exchange authorities. If needed, one can obtain and process data from the IMF database and individual central bank websites to calculate the rankings directly.As of the end of last year, South Korea maintained its position as the ninth largest holder of foreign exchange reserves globally, but it fell to tenth in January and twelfth in February. By the end of May, it had dropped to thirteenth, before climbing back to tenth by the end of June. It remained in tenth place as of the end of July.As of the end of August, South Koreas foreign exchange reserves stood at $442.28 billion, a significant increase of $14.33 billion from $427.95 billion at the end of July. This marks the largest increase on record.The reserves have risen for three consecutive months since June. However, they are still below the all-time high of $469.21 billion recorded in October 2021.A Bank official explained, The substantial increase is attributed to a significant rise in foreign currency deposits by financial institutions, along with gains from operations and the increased value of non-dollar foreign currency assets.* This article has been translated by AI. September 3, 2026 0
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Global Financial Markets React to U.S. and Japan Economic Trends Global financial markets exhibited mixed trends amid varying expectations for monetary policy in major economies, geopolitical tensions in the Middle East, and movements in government bond yields. U.S. stocks rose due to declining bond yields and strong performance in artificial intelligence-related stocks, while Japanese and European markets showed weakness. With the likelihood of a rate hike by the Bank of Japan increasing, international oil and gold prices also saw gains.On September 2, the U.S. Standard & Poors (S&P) 500 index rose 0.46% to close at 7,666.6. In contrast, the European Stoxx 600 index fell 0.24%, and Japans Nikkei 225 index plummeted by 2.85%.The bond market also displayed differentiation. The yield on the U.S. 10-year Treasury note fell by 2 basis points to 4.78%, influenced by buying interest and dovish comments from Federal Reserve officials. Conversely, the yield on Germanys 10-year bonds rose by 3 basis points to 3.38%, while Japans 10-year yield increased by 2 basis points to 3.03%.In Japan, concerns about potential interest rate hikes have intensified. Kazuo Ueda, Governor of the Bank of Japan, stated that monetary policy decisions would consider upward risks to inflation. This statement is interpreted by the market as supporting the possibility of a rate hike in September. As Japanese government bond yields reached their highest level in 30 years, the yen appreciated by 0.93% against the dollar on the same day.In Europe, interest rates and fiscal issues have emerged as significant market variables. Key officials from the European Central Bank (ECB) have repeatedly mentioned the possibility of further rate hikes. Additionally, growing concerns over Frances fiscal and political instability have widened the gap between the 10-year bond yields of Germany and France to the highest level since 2012.In the commodities market, instability in the Middle East continues to impact prices. Brent crude oil rose by 1.04% to $95.63 per barrel, while gold prices increased by 1.22%. U.S. President Donald Trump has left open the possibility of additional military operations against Iran, heightening geopolitical risks that are influencing oil and safe-haven asset prices.The International Financial Center noted, The solid performance of major companies in the U.S. and the global economys relatively high resilience to energy shocks from the Middle East suggest that stock markets may withstand rising bond yields. However, with the intertwining of interest rate hike expectations, fiscal instability, and Middle Eastern tensions, differentiation and increased volatility in global financial markets are expected to continue for the time being.* This article has been translated by AI. September 3, 2026 0
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Korea FX reserves gain record Aug, BOK drops ranking table SEOUL, September 03 (AJP) -South Korea's foreign exchange reserves stretched in monthly record of $14.33 billion in August amid record-setting trade surplus streak and a stronger won, according to the Bank of Korea which quietly ended a 25-year practice of publishing the country's global reserve ranking. Foreign reserves stood at $442.28 billion at the end of August, up from $427.95 billion a month earlier, the central bank said Thursday. The increase was the largest since the BOK began compiling the data in 1971, surpassing the previous monthly record of $14.29 billion set in May 2009. Reserves rose for a third consecutive month and reached their highest level since May 2022. The BOK attributed the increase to a sharp rise in foreign-currency deposits by financial institutions, investment income and an increase in the dollar-converted value of assets denominated in other currencies. A BOK official said banks appeared to have placed more surplus foreign currency at the central bank after it began paying interest on excess foreign-currency reserves earlier this year. The jump also came after South Korean foreign-exchange authorities reportedly bought about $20 billion in dollars repatriated by SK hynix following its $26.5 billion American depositary receipt offering in the U.S. in July. The purchases were made through the Foreign Exchange Stabilization Fund, jointly managed by the finance ministry and the BOK, as authorities sought to limit currency-market volatility and rebuild foreign-exchange buffers, according to Reuters account. The BOK and finance ministry declined to comment on the transaction. South Korea also posted a record $34.75 billion trade surplus in August as exports surged 68.7 percent from a year earlier to $98.25 billion, led by another record-setting semiconductor shipments. By asset type, securities holdings, the largest component of the reserves, increased $7.07 billion from July to $387.07 billion. Deposits rose $7.17 billion to $30.30 billion. Special drawing rights, or SDRs, increased by $60 million to $15.77 billion, while South Korea's reserve position at the International Monetary Fund rose by $30 million. Gold reserves remained unchanged at $4.79 billion because the BOK values its gold holdings at acquisition cost rather than current market prices. The central bank made no additional gold purchases in August after recently announcing plans to resume purchases by acquiring domestically produced physical gold for export. Despite three consecutive monthly gains, reserves remain below their record $469.21 billion reached in October 2021. The FX data this month accompanied a notable change in the BOK's monthly report. For the first time in 25 years, the central bank removed a table comparing South Korea's reserves with those of other major economies and showing the country's global ranking. The BOK had provided the international comparison since February 2001, when foreign reserves were closely watched as a measure of South Korea's recovery from the 1997-98 Asian financial crisis. Thursday's release omitted the table without prior notice or an explanation in the report. Asked about the change, a BOK official said international rankings can fluctuate for reasons unrelated to a country's underlying external soundness, making them less meaningful as an indicator. South Korea's ranking has swung sharply this year. The country ranked ninth globally at the end of 2025 before slipping to 10th in January and 12th in February. It fell as low as 13th in May before rebounding three places to 10th in June. The BOK has long published foreign reserve data as an indicator of the country's capacity to meet external payment needs and respond to volatility in the foreign-exchange market. The bank denied that it removed the table to avoid negative headlines if Korea's ranking were to fall again since the underlying data remain publicly available through the IMF and individual central banks. AJP Takeaways • South Korea's foreign exchange reserves rose by a record $14.33 billion in August to $442.28 billion, the largest monthly increase since records began in 1971. • Foreign-currency deposits increased by $7.17 billion, while securities holdings rose $7.07 billion. • The BOK removed South Korea's global reserve ranking from its monthly release for the first time in more than 25 years, saying the ranking was not a meaningful gauge of external soundness. September 3, 2026 0 -
U.S. Treasury Official Warns of Japan's Long-Term Interest Rates Impacting Markets U.S. Treasury officials have expressed concern over Japans long-term interest rates, which have risen above 3%. An increase in these rates could lead Japanese investors to repatriate funds invested in U.S. Treasury bonds, especially as the yield on U.S. 10-year bonds has reached its highest level in 20 months.Erin Brown, the U.S. Treasurys Deputy Secretary for International Affairs, stated in an exclusive interview with the Nikkei that Japan holds a significant amount of government bonds and agency securities from major countries, which particularly impacts the U.S. market. The interview took place on September 1 in Asheville, North Carolina, during the G20 finance ministers and central bank governors meeting and was reported on September 2.Japans institutional investors hold over $1 trillion in U.S. Treasury bonds. If Japanese interest rates rise, there may be a tendency for these funds to return to Japan. The yield on U.S. 10-year bonds has already reached 4.8%, the highest level in 20 months. The Nikkei noted that further increases in rates could burden the U.S. economy.Market expectations suggest that the Bank of Japan may raise interest rates during its monetary policy meeting on September 17-18. While Brown stated, I have no intention of directing the central bank, she acknowledged that market expectations often influence monetary policy. The Nikkei interpreted this as a comment supporting a potential rate hike by the Bank of Japan.Regarding the yens depreciation, which is nearing 160 yen to the dollar, Brown remarked, Both the U.S. and Japan have a common interest in exchange rate stability. In response to concerns that the yens weakness has worsened due to delayed rate hikes by the Bank of Japan, she emphasized the importance of listening to market signals, stating, I do not think we are lagging behind, but it is crucial to pay attention to the markets signals.Meanwhile, Japans Finance Minister, Shunichi Suzuki, and U.S. Treasury Secretary Janet Yellen met in Asheville on August 31 during the G20 finance ministers and central bank governors meeting. Brown, who attended the meeting, noted that the two countries had candid discussions about their fiscal policies and reaffirmed the importance of fiscal consolidation.During a press conference on the same day, Suzuki explained to the U.S. side the commitment to significantly reduce the ratio of national debt to GDP. Brown also mentioned Japans plans to lower the consumption tax on food, stating, Both countries confirmed their commitment to appropriately address the debt burden.Brown highlighted that fiscal consolidation is a significant challenge not only for Japan but also for several countries, including the U.S. She indicated that Yellen would soon announce plans to reduce the U.S. budget deficit.Brown, who previously worked at PIMCO, was appointed in early August. The Deputy Secretary for International Affairs is responsible for direct consultations with the Japanese government on exchange rate issues.Brown identified rising global long-term interest rates as primarily driven by increased energy prices due to the closure of the Strait of Hormuz. She suggested that if passage through the strait resumes, inflation expectations will subside, and long-term interest rates are likely to decline again.* This article has been translated by AI. September 2, 2026 1
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Korean Finance Minister Advocates for AI and Domestic Investment at G20 Koo Yun-cheol, the Deputy Prime Minister and Minister of Economy and Finance, presented growth strategies focused on investments in artificial intelligence (AI) and domestic market stimulation during the G20 finance ministers and central bank governors meeting. He emphasized the need for both surplus and deficit countries to collaborate on policy responses to reduce global imbalances and called for fair burden-sharing among creditors and transparency in debt data regarding the global debt issue.According to the Ministry of Economy and Finance, Koo attended the second G20 finance ministers and central bank governors meeting held in Asheville, North Carolina, from August 31 to September 1, 2026. The discussions covered global economic conditions, growth policies, current account imbalances between nations, debt in developing countries, financial literacy and fraud, and innovations in the financial sector.During the global economy session, Koo noted that despite the prolonged conflict in the Middle East, the South Korean economy continues to grow steadily. He stated that the country is responding to the post-war economic environment by promoting investments in future industries like AI and stabilizing supply chains.In the growth policy session, Koo outlined the governments growth strategy, which includes three major mega-projects aimed at fostering AI as a new growth engine and policies for transitioning existing key industries to AI. He also mentioned plans to expand investments in strategic industries through initiatives like the National Growth Fund, along with support for youth and small businesses, and structural reforms to enhance medium- to long-term growth potential.Regarding the global debt issue, Koo stressed the importance of equitable burden-sharing among creditors and the need for comprehensive disclosure of debt-related data. He also urged debtor countries to enhance their domestic resource mobilization capabilities and pursue structural reforms to address the root causes of debt vulnerability.In the global imbalance session, Koo took the lead in discussions as a representative of the G20 Global Imbalance Study Group, co-chaired by South Korea and Australia. He highlighted the necessity of analyzing the impact of industrial structural changes, including AI, on imbalances between countries. Koo reiterated that both surplus and deficit countries must take policy actions to alleviate these imbalances.As part of South Koreas policy direction, he proposed stimulating domestic demand and increasing domestic investment, particularly through the three mega-projects to bolster the growth foundation. The G20 chairs statement from the United States also noted that countries with excessive and persistent external surpluses should reduce factors that constrain domestic consumption, while deficit countries should work on increasing domestic savings and fiscal consolidation.The G20 acknowledged that maintaining growth in the global economy requires smooth operation of key supply chains, including energy, food, fertilizers, and critical minerals. It identified supply chain disruptions due to war and geopolitical conflicts as major risks and urged countries to refrain from unnecessary export restrictions. The potential of AI and digital infrastructure investments to enhance productivity was also recognized.During the meeting, Koo held bilateral discussions with finance ministers from major countries, including the United States, the United Kingdom, France, Italy, India, and Qatar. He discussed recent economic and financial market trends and cooperation strategies with the U.S., and agreed to strengthen collaboration with the U.K. during its G20 presidency in 2027 and South Koreas in 2028. Koo proposed hosting the Korea-India finance ministers meeting in South Korea in the second half of this year.With Qatar, he discussed energy supply chains and infrastructure cooperation, as well as expanding local business participation by South Korean companies and collaboration in AI and digital sectors. In meetings with the EU, he exchanged views on geopolitical issues, including Ukraine, and global imbalances.Koo stated, We will enhance our growth potential through investments in future industries like AI, stabilize supply chains, and play a responsible role in alleviating global imbalances.* This article has been translated by AI. September 2, 2026 1