Southern Korean central bank lowers rates to aid debt restructuring

South Korea’s central bank unexpectedly cut the benchmark seven-day repurchase rate to 1.25%, a new record low, to aid indebted companies in their restructuring plans. The South Korean won moved sharply lower.

The decision to cut benchmark rates was projected by only Goldman Sachs of 18 economists surveyed while others saw a reduction in the next couple of months.

South Korea’s sovereign yield dropped to a record low this month after minutes of the May meeting showed a board member called for lower rates while the government and central bank planned to create a KRW 11tn ($9.5bn) fund to facilitate corporate restructuring.
 
The board’s May minutes showed several members were worried about downside risks from the corporate overhaul such as unemployment and declining investment.
 
The government’s plans to aid corporate restructuring would support its ailing shipbuilders who had slashed jobs and were in process of restructuring their debt.
 
Source: Bloomberg
 
Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s