Short-term External Debt Ratio at 37.6% at End of June... Highest in 7.5 Years

Bank of Korea 'End of June International Investment Position (Preliminary)'

[Asia Economy Reporter Eunbyeol Kim] The short-term external debt ratio with maturities under one year has risen to its highest level in seven years and six months. However, this is largely due to the impact of the Korea-US currency swap, so there is no issue with foreign currency soundness.

According to the 'End of June International Investment Position (Provisional)' released by the Bank of Korea on the 20th, the short-term external debt ratio relative to reserve assets (hereafter short-term external debt ratio) stood at 37.6% as of the end of June, up about 0.4 percentage points compared to three months earlier.

The proportion of short-term external debt in total external debt (hereafter short-term external debt share) also rose by 0.1 percentage points from the end of the previous quarter to 30.7%.

Both the short-term external debt ratio and the short-term external debt share reached their highest levels since the end of 2012.

Choi Jin-man, head of the Foreign Investment Statistics Team at the Bank of Korea's Economic Statistics Bureau, stated, "The short-term external debt ratio is largely attributable to the Korea-US currency swap funds. As the bond and debt relationship between the central banks replaced it, short-term borrowing by deposit-taking institutions actually decreased, so although the ratio itself rose, it is assessed as stable in terms of external debt burden."

Regarding the rise in the short-term external debt share, he also evaluated, "Currently, the private sector's long-term foreign currency funding capacity remains at a good level, and recording around 30% is significantly lower than during times of crisis."

As of the end of June, the outstanding external debt balance was $503.1 billion, an increase of $17.2 billion from the end of the first quarter. By maturity, short-term external debt increased by $5.7 billion, and long-term external debt rose by $11.5 billion. By sector, general government external debt increased by $8.7 billion, the central bank by $14.6 billion, and other sectors by $0.2 billion, while deposit-taking institutions' external debt decreased by $6.3 billion.

Korea's net external claims, calculated by subtracting the external debt balance ($503.1 billion) from the external claims balance ($952.8 billion), stood at $449.8 billion, down $14.5 billion from the end of March.

Net external financial assets decreased by $12.2 billion to $553.2 billion. As residents increased securities investments, external financial assets rose by $67.4 billion to $1.7401 trillion, and as non-residents increased securities investments, external financial liabilities also increased by $79.6 billion to $1.1869 trillion. The Bank of Korea explained, "The increase in external financial assets and liabilities was mainly due to non-transaction factors such as domestic and international stock price rises and the appreciation of the Korean won."

This content was produced with the assistance of AI translation services.