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South Korea Lifts 14-Year Ban on 'Kimchi Bonds' to Attract Hedge Capital Inflows
Summary: In a bid to attract hedge capital inflows influenced by the surge in speculation on USD stablecoins, South Korea has lifted a 14-year ban on domestic financial institutions purchasing 'Kimchi Bonds' (foreign currency bonds issued onshore with the aim of converting into Korean won). Previously, the Bank of Korea prohibited local investments in such bonds ...
In a bid to attract hedge capital inflows influenced by the surge in speculation on USD stablecoins, South Korea has lifted a 14-year ban on domestic financial institutions purchasing 'Kimchi Bonds' (foreign currency bonds issued onshore with the aim of converting into Korean won). Previously, the Bank of Korea prohibited local investments in such bonds in 2011 due to concerns over currency mismatch risks. Now, with retail investors flocking to overseas stock markets and the USD stablecoin market leading to a weakening Korean won and insufficient foreign currency liquidity, the Bank of Korea has adjusted its policy. The Bank of Korea stated that this move can improve foreign currency liquidity, alleviate pressure on the Korean won depreciation, and address the imbalance in foreign exchange supply and demand. (Financial Times)
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Link: South Korea Lifts 14-Year Ban on 'Kimchi Bonds' to Attract Hedge Capital Inflows [Copy]
