South Korea lifts 14-year ban on 'Kimchi bonds' to attract hedge capital inflows

Odaily News Affected by the speculative boom in US dollar stablecoins, in order to attract hedging capital inflows, South Korea lifted the 14-year ban on domestic financial institutions buying "Kimchi bonds" (foreign currency bonds issued onshore and intended to be exchanged for won). Previously, the Bank of Korea banned local investment in such bonds in 2011 due to concerns about currency mismatch risks. Now, retail investors are pouring into overseas stock markets and US dollar stablecoin markets, causing the won to weaken and foreign currency liquidity to be insufficient, so the Bank of Korea has adjusted its policy. The Bank of Korea said that this move will improve foreign currency liquidity, ease the pressure on the won to depreciate, and solve the imbalance between foreign exchange supply and demand. (Financial Times)