---
title: "South Korea will allow more companies to borrow overseas to boost foreign exchange liquidity"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/222915260.md"
description: "The South Korean Ministry of Finance announced that it will relax foreign exchange regulations, allowing more companies to borrow overseas to enhance liquidity and defend the won, which is at a 15-year low. This move aims to improve the foreign exchange liquidity situation and alleviate the depreciation of the won caused by Federal Reserve policies and domestic political uncertainties. The Ministry stated that it will allow companies to borrow in foreign currencies and convert them into won for investment, while also raising the maximum limit on banks' foreign exchange futures contract funds. Economists pointed out that this policy aims to control the depreciation of the local currency, but the external environment still poses pressure on emerging currencies"
datetime: "2024-12-20T10:27:02.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/222915260.md)
  - [en](https://longbridge.com/en/news/222915260.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/222915260.md)
---

> 支持的语言: [English](https://longbridge.com/en/news/222915260.md) | [繁體中文](https://longbridge.com/zh-HK/news/222915260.md)


# South Korea will allow more companies to borrow overseas to boost foreign exchange liquidity

According to the Zhitong Finance APP, the South Korean Ministry of Finance announced on Friday that it will relax foreign exchange regulations, allowing more companies to borrow from overseas to defend the won, which is at a 15-year low and has seen some improvement in liquidity. The Ministry stated in a joint announcement with the central bank and regulatory agencies: "Strict regulations have limited the efficiency of foreign exchange management, and it is necessary to consider the deterioration of foreign exchange liquidity conditions following recent events."

On Thursday, the won fell to its lowest level in 15 years, dragged down by risk aversion following the Federal Reserve's cautious stance on further interest rate cuts, as well as domestic political uncertainty triggered by a brief state of emergency declared by the president on December 3 and subsequent impeachment proceedings.

According to the statement, the measures taken include allowing companies to borrow in foreign currency and converting those funds into won (if the funds are used for investments in equipment, real estate, land, and other facilities).

A Ministry official stated: "This is a paradigm shift in foreign exchange policy, moving from regulating foreign debt to attracting more foreign capital inflows."

During the Asian financial crisis from 1997 to 1998 and the global financial crisis from 2007 to 2008, South Korea suffered from capital flight, which is why it has maintained strict controls on foreign currency borrowing while encouraging overseas investment.

Since becoming a net creditor in 2014, the country's net financial assets abroad reached a record USD 977.8 billion by the end of September.

The official stated, "We will continue to relax regulations on private sector capital inflows unless they negatively impact foreign debt or credit ratings."

The Ministry also stated that it will raise the maximum limit for foreign exchange futures contract funds held by domestic banks and foreign banks' Seoul branches from the current 50% and 250% of their fund holdings to 75% and 375%, respectively.

iM Securities economist Park Sang-hyun stated: "They are clearly tools to control the pace of depreciation of the local currency by alleviating foreign exchange liquidity tensions." Park said, "But there will also be limitations; adverse external environments such as U.S. policies are putting pressure on all emerging currencies, not just the won."

The Ministry stated that it will implement the measures swiftly and consider expanding them after assessing their effectiveness

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