Foreign currency borrowing posts net fall in 2009

SEOUL, Nov. 18 (Yonhap) -- The balance of foreign currency borrowing by banks
operating in South Korea posted its first net fall in more than four years as the
central bank tightened control of foreign debt and companies' demand for working
capital decreased, the central bank said Wednesday.
The combined foreign-currency borrowing by South Korean banks and local branches
of foreign banks fell a net US$6 billion during the first 10 months of this year
after they repaid more debts than they newly took, according to the Bank of Korea
(BOK).
The negative growth for this year was a stark comparison from 2007 when the
banks' foreign money borrowing grew by a net $16 billion, the BOK said.
The 2009 figure is also a sharp turnaround from last year when the banks took out
a net $5.6 billion of new foreign currency debts, the central bank said.
It was the first time the banks' repayment exceeded their borrowing at least
since 2005, according to available central bank data. The bank did not provide
comparable figures before 2005.
The decreased foreign debts came as the central bank tightened rules on foreign
debts in 2007 in a bid to reduce foreign liabilities of local lenders, a bank
official said.
Since 2007, the bank took a series of measures to lower foreign currency
borrowing, including imposition of limits on the purposes of such debts.
Decreased demand for foreign loans by local companies was also responsible as the
global economic slowdown cut down needs for working capital, the official said.
As of the end of October, the outstanding foreign currency debts reached $44.5
billion, down from $50.5 billion as of the end of 2008, the bank said.
pbr@yna.co.kr
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