South Korea said yesterday it would ban banks and other financial firms from buying foreign-currency bonds sold by local firms for domestic projects, in an attempt to curb foreign debt and the won’s rise.
The Bank of Korea, the central bank, said financial firms from next Monday would be barred from subscribing to public offerings of so-called “kimchi bonds” if the issuer intends to swap the proceeds into won.
Local companies sometimes issue kimchi bonds to raise US dollars for settlements with US trading partners.
However, the central bank said many firms were in fact issuing such bonds to get around rules on banks’ foreign loans.
“Companies have been using about 70 percent of the bonds for won use in [South] Korea,” it said in a statement.
By law, banks can only issue foreign-currency loans if the borrower needs the money for overseas use.
Financial firms will still be allowed to buy such bonds if they are intended for overseas -foreign-currency use.
The announcement marked the latest attempt by authorities to ease the destabilizing effect of so-called “hot money.”
The country has seen a surge of foreign capital into its markets, amid solid economic growth and expectations of a stronger won. This has raised fears that the foreign cash could exit just as swiftly, as it did during the 1997-1998 East Asian financial crisis and the 2008 global crisis.
South Korea’s short-term foreign debt stood at US$146.7 billion as of the end of March, up US$11.7 billion from three months earlier, marking the largest quarterly growth in more than two years.
The government has already capped banks’ foreign-exchange forward positions to try to curb speculative bets on the won, which has risen 6 percent this year against the US dollar.
It has also brought in a tax on foreign investment in local bonds and a levy on banks’ offshore borrowings.
Authorities are concerned that kimchi bonds have been used as a way of getting cheaper loans, creating unnecessary exchange-rate risks, instead of meeting actual foreign-currency needs such as settling contracts.
As of the end of last month, outstanding kimchi bonds stood at about US$17.05 billion. About 77 percent of the total was held by the local branches of foreign banks operating in South Korea, according to central bank data.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last