South Korea's short-term foreign debts rose fast in the third quarter, replacing long-term debts, central bank data showed Thursday.
The country's external liabilities totaled 409.1 billion U.S. dollars as of the end of September, up 1.8 billion dollars from three months earlier, according to the Bank of Korea (BOK).
Foreign debts with a maturity of more than a year fell 0.7 billion dollars to 289.3 billion dollars in the cited period, but debts that mature in less than a year increased 2.5 billion dollars to 119.8 billion dollars.
The fast increase in short-term debts could worsen a foreign debt-servicing capability of the economy as increased volatility in the global financial market may lead to an abrupt foreign fund flow out of the local financial market.
The ratio of short-term foreign liabilities to foreign currency reserves reached 31.1 percent as of end-September, up 0.3 percentage points from three months ago. It was the highest in two years.
The portion of short-term foreign debts to the total external liabilities stood at 29.3 percent as of end-September, posting the highest since June 2014.
The rising portion of short-term foreign debts came from expectations for policy rate hike in the foreseeable future.
The BOK was widely forecast to raise its benchmark interest rate from the current record low of 1.25 percent later this year or early next year.
In a bid to gain more interest income, foreign investors may put their money in the local financial market after the BOK's rate increase.
The country's external liabilities totaled 409.1 billion U.S. dollars as of the end of September, up 1.8 billion dollars from three months earlier, according to the Bank of Korea (BOK).
Foreign debts with a maturity of more than a year fell 0.7 billion dollars to 289.3 billion dollars in the cited period, but debts that mature in less than a year increased 2.5 billion dollars to 119.8 billion dollars.
The fast increase in short-term debts could worsen a foreign debt-servicing capability of the economy as increased volatility in the global financial market may lead to an abrupt foreign fund flow out of the local financial market.
The ratio of short-term foreign liabilities to foreign currency reserves reached 31.1 percent as of end-September, up 0.3 percentage points from three months ago. It was the highest in two years.
The portion of short-term foreign debts to the total external liabilities stood at 29.3 percent as of end-September, posting the highest since June 2014.
The rising portion of short-term foreign debts came from expectations for policy rate hike in the foreseeable future.
The BOK was widely forecast to raise its benchmark interest rate from the current record low of 1.25 percent later this year or early next year.
In a bid to gain more interest income, foreign investors may put their money in the local financial market after the BOK's rate increase.
Latest comments