ID :
202534
Sun, 08/21/2011 - 10:45
Auther :
Shortlink :
https://oananews.org//node/202534
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FX indicators sound alarm bells on S. Korean economy
SEOUL, Aug. 21 (Yonhap) -- A spate of foreign exchange indicators on the South Korean economy have been rising to alarming levels amid mounting concerns on the global economy, sources said Sunday.
The spread on foreign exchange stabilization bonds, which mature in 2019, reached 1.22 percent as of Aug. 19, up 0.24 percentage points from Aug. 5, ahead of Standard & Poor's first-ever U.S. credit rating cut, according to the financial sources.
The figure marks the highest level since 1.29 percent reached on Nov. 30 in the aftermath of North Korea's shelling of Yeonpyeong Island. A higher reading indicates a deterioration in the credit of South Korean government bonds.
Meanwhile, the currency rate swap (CRS) for one year plunged to 1.44 percent as of Aug. 19, down from around 2 percent earlier this month. A lower CRS indicates more people are willing to receive less interest in a bid to secure dollar supply.
"As U.S.-based banks move to retrieve short-term capital they lent to European banks, concerns are rising on the latter's liquidity. This may be one reason why South Korea's CRS has recently plunged," said Bae Min-geun, an economist at the LG Economic Research Institute.
Market watchers said the persistent jitters on the global economy may further worsen next month.
Italy is due to pay back government bonds worth 39 billion euros (US$55.8 billion) and doubts linger on whether Greece will be able to successfully cope with its sovereign debt.
"In September, we have to keep our eyes on Italy and Greece, as well as whether Europe will see a deterioration in conditions for capital procurement," said Ahn Nam-ki, an economist at the Korea Center for International Finance.
The spread on foreign exchange stabilization bonds, which mature in 2019, reached 1.22 percent as of Aug. 19, up 0.24 percentage points from Aug. 5, ahead of Standard & Poor's first-ever U.S. credit rating cut, according to the financial sources.
The figure marks the highest level since 1.29 percent reached on Nov. 30 in the aftermath of North Korea's shelling of Yeonpyeong Island. A higher reading indicates a deterioration in the credit of South Korean government bonds.
Meanwhile, the currency rate swap (CRS) for one year plunged to 1.44 percent as of Aug. 19, down from around 2 percent earlier this month. A lower CRS indicates more people are willing to receive less interest in a bid to secure dollar supply.
"As U.S.-based banks move to retrieve short-term capital they lent to European banks, concerns are rising on the latter's liquidity. This may be one reason why South Korea's CRS has recently plunged," said Bae Min-geun, an economist at the LG Economic Research Institute.
Market watchers said the persistent jitters on the global economy may further worsen next month.
Italy is due to pay back government bonds worth 39 billion euros (US$55.8 billion) and doubts linger on whether Greece will be able to successfully cope with its sovereign debt.
"In September, we have to keep our eyes on Italy and Greece, as well as whether Europe will see a deterioration in conditions for capital procurement," said Ahn Nam-ki, an economist at the Korea Center for International Finance.
