S. Korea raises cap on currency forward positions amid forex imbalance

In an emergency move to counter the latest market disturbance caused by COVID-19, South Korea’s government on Wednesday activated a “phase one contingency plan,” expanding the cap on foreign exchange forward positions of banks. It also said that it will reduce the airport landing fees for airplanes and exempt highway tolls for express buses, as a relief measure for the transportation industry which took the hardest blow from the epidemic spread. Starting Thursday, local ba

March 18, 2020

US shale firms' crisis may benefit Korean refiners: sources

  South Korean oil refiners will likely benefit from a crisis in the US shale industry sparked by plunging international crude prices, industry sources said Wednesday. A recent tumble in oil prices is projected to cut US shale oil firms' production sharply down the road, leading to a drop in supply from American producers and rising prices of petroleum products. According to the sources, Bloomberg New Energy Finance (BNEF) recently predicted US shale oil output to drop by 1 million barre

March 18, 2020

Coronavirus could trigger ‘unprecedented’ economic crisis: vice minister

In an emergency response to the latest stock market plummeting in the United States, the South Korean government on Tuesday warned that the ongoing coronavirus pandemic could possibly expand into an “unprecedented” economic crisis. “We should take into account that the spread of COVID-19 may lead to an unprecedented complex crisis situation for both the real economy and the financial market,” said Kim Yong-beom, first vice minister of finance, in an urgent meeting wit

March 17, 2020

[Economy in Pandemic] Coronavirus puts Korean economy into uncharted territory

The Korea Herald is publishing a series of interviews and analysis over looming threats of COVID-19 on the Korean economy and beyond. This is the first installment. -- Ed. Despite a series of emergency actions being taken by governments around the world, the novel coronavirus -- and its resulting disease COVID-19 -- is wielding sweeping power over the global financial market and the real economy, indicating rising global recession risks. The Bank of Korea cut its policy rate Monday to a recor

March 17, 2020

Korea's money supply grows in Jan.

South Korea's money supply continued to grow in January, partly on an increase in funds held by local households, central bank data showed Tuesday. The country's M2 came to 2,927.5 trillion won ($2.36 trillion) as of end-January, up 0.7 percent from a month earlier, according to preliminary data from the Bank of Korea (BOK). From a year earlier, the reading marks a 7.8 percent rise. M2 is a measure of the money supply that counts the currency in circulation, including bank debentures and dep

March 17, 2020

[News Focus] COVID-19 makes Korean currency cheaper

SEJONG -- A country’s interest rate generally determines the value of its currency, although this formula may not be applicable to safe havens such as the US dollar, the euro, the British pound and the Japanese yen. For an emerging country whose currency depends on reserve currencies like the dollar, a low interest rate incurs an outflow of foreign capital as the currency becomes less attractive to investors. Capital flight results in a cheap local currency. Over the past few

March 17, 2020

S. Korea to spend W30b won to support fishery industry

South Korea said Tuesday it will allocate 30 billion won ($24.2 million) to fishing businesses hit hard by the economic fallout from the global spread of the new coronavirus. The decision came amid a sharp decrease in the consumption of seafood from home and abroad due to the COVID-19 epidemic. South Korea said it will provide 20 billion won in loans with a low interest rate of 1.3 percent to local aquaculture households whose sales have tumbled by 15 percent or more in February from a month

March 17, 2020

Agriculture exports to China drop 6.7% on virus in Jan.-Feb.

South Korea's exports of farm goods to China fell 6.7 percent in the first two months of the year due to the spread of the novel coronavirus, government data showed Tuesday. Shipments of agricultural and livestock products to the neighboring country came to $138 million in the January-February period, compared with $148 million during the same period a year earlier, according to the data from the Ministry of Agriculture, Food and Rural Affairs. The cumulative decline follows a 22.5 percent o

March 17, 2020

BOK slashes rate to record low 0.75%, after emergency Fed move

Amid growing concerns over COVID-19, South Korea’s key interest rate plunged below 1 percent for the first time in history as the central bank cut it by 50 basis points to a record low of 0.75 percent. The decision came hours after the US Federal Reserve took the drastic step of slashing its benchmark interest rate to near zero to offset the economic fallout from the novel coronavirus. “The US Fed in recent days lowered its interest rate by 150 basis points, which was a swift mo

March 16, 2020

S. Korea facing more trade barriers from emerging nations: report

Emerging countries launched dozens of new investigations against goods from South Korea in line with growing protectionism around the globe, data showed Monday. Such countries accounted for 34 of the 41 new trade investigation cases against Asia's No. 4 economy in 2019, according to the data compiled by the Korea International Trade Association (KITA). The United States launched five new investigations against South Korea, with Australia and the European Union taking up one each. Emerging nat

March 16, 2020

BOK under growing pressure to cut rate following Fed rate reduction

The Bank of Korea will have no choice but to take all available measures to shield the local economy against further damage from the outbreak of the new coronavirus, including a base rate reduction, especially since the US Fed cut its own rates to nearly zero, analysts here said Monday. "The Bank of Korea too must now take steps due to the confusion in the local financial market," said Korea Investment & Securities analyst Ahn Jae-kyun. "Like the central banks of other majo

March 16, 2020

BOK likely to cut rate this week amid calls for more stimulus

South Korea’s central bank is likely to convene an emergency meeting of its monetary policy board this week to slash its interest rates to a record-low of 1 percent, amid growing calls to beef up economic stimulus against the novel coronavirus outbreak. On Friday, Bank of Korea Gov. Lee Ju-yeol attended a special economic meeting related to coronavirus at Cheong Wa Dae, presided by President Moon Jae-in. Economy-related ministers including Deputy Prime Minister and Finance Minister Hong

March 15, 2020

S. Korea-US trade volume expands 32% on bilateral FTA

Trade volume between South Korea and the United States totaled $135.2 billion last year, up 32 percent from $101.8 billion posted in 2012, when a bilateral free trade agreement went into effect, government data showed Sunday. Trade volume between the two countries in 2019 also moved up 2.7 percent on-year, which is significant considering South Korea's overall trade with the world plunged 8.3 percent over the period to $1.04 trillion, according to the data compiled by the Ministry of Trade, In

March 15, 2020

S. Korea imposes 6-month ban on stock short-selling

South Korea’s financial authorities on Friday announced a six-month ban on short-selling in the local stock market, effective Monday, in an effort to reduce market volatility amid the spread of COVID-19. The hurried action came as the country’s stock market nose-dived earlier the same day, triggering a temporary trading halt in both the main bourse Kospi and the secondary Kosdaq. “Short-selling of all listed stocks on (the main bourse) Kospi and (secondary) Kosdaq and (ter

March 13, 2020

Virus impact on airline ratings depends on duration, severity: S&P

S&P Global Ratings said Friday the ultimate impact of the new coronavirus outbreak on its global airline ratings will depend on the duration and severity of the crisis. The spread of COVID-19 cases across the globe has caused air traffic demand to plunge in recent weeks. With the virus now present in more than 100 countries and territories, more flight cancellations are expected as lower travel demand, S&P said in a statement.  "We see significant downside potential to t

March 13, 2020

Earlier-than-expected rate cut grows plausible amid coronavirus

Weighed by the escalating impact of COVID-19, South Korea’s central bank hinted Friday that it may lean toward an earlier-than-expected policy rate cut as early as within this month. “Members of the Monetary Policy Board are currently contemplating the necessity to hold an extraordinary panel meeting,” the Bank of Korea said in a release. The monetary policy institution’s latest move came as Asia’s fourth-largest economy saw its stock market nosedive amid inve

March 13, 2020

Auto exports down for 7th month on virus-hit disruptions

South Korea's automobile exports sank 25 percent in February from a year earlier to extend their on-year drop to the seventh month in a row as the operation of local car factories was partially disrupted amid the global outbreak of the new coronavirus, data showed Friday. South Korean carmakers shipped 123,022 units of cars overseas last month, according to the data compiled by the Ministry of Trade, Industry and Energy. In terms of value, auto exports also moved down 16.6 percent over the p

March 13, 2020

BOK vows market stabilization measures

The Bank of Korea said Friday that it will take active steps to help stabilize the local market, noting the volatility in the country's financial markets may seem excessive. "The Bank of Korea plans to actively use its policy measures to stabilize the financial market as the volatility in the local financial and foreign exchange markets is expanding due to the impact from the spread of COVID-19," the central bank said after an emergency meeting. The meeting, chaired by BOK Dep. Gov.

March 13, 2020

Institutions go long on stocks amid market havoc

South Korean institutional investors have been loading up on stocks this month despite a virus-induced market crash, data showed Friday. The country's state pension fund and other institutions remained in net buying mode between March 2 and Thursday, purchasing stocks worth nearly 1.1 trillion won ($910 million), according to the data from the Korea Exchange. The figure represents a drastic increase from their February net buying tallied at 348 billion won. Institutions' net buying stood at

March 13, 2020

[COVID-19 Market Impact] South Korea's economic rebound loses heat

After struggling with a record-low growth pace last year, South Korea’s economy was aspiring to make a rebound in 2020, hopefully on the back of global trade improvements and a chip industry recovery -- until suffering the harsh blow of the novel coronavirus. As of December, major global organizations and policy institutes here forecast that Korea’s economic growth pace for 2020 will be in the 2.2-2.4 percent range. While the International Monetary Fund suggested a conservative 2.

March 12, 2020