|
The government's plan to issue foreign exchange stabilization bonds has hit a snag. It tried to issue US$1 billion worth of such bonds in the international financial market to increase its foreign currency holdings, but as a result of the failure the won again plummeted against the U.S. dollar on Thursday.
Amid rumors of a September crisis early this month, the government decided to issue forex stabilization bonds to show that Korea has no problem whatsoever in its credit standing and forex borrowings.
At the time, Shin Je-yoon, deputy minister for international affairs at the Strategy and Finance Ministry, left the country after saying, "We'll show if Korea is really in a crisis by issuing foreign exchange stabilization bonds."
The government issued forex stabilization bonds overseas on eight occasions since 1998, after the country was gripped by an Asia-wide financial crisis.
Choi Jong-ku, the director-general of the Strategy and Finance Ministry's International Finance Bureau, said would-be buyers of the bonds are demanding higher interest rates considering that the international financial market has experienced jitters recently due to Lehman Brothers' insolvent bonds.
The government expected the spread on forex stabilization bonds to stand at 1.8 to 2 percent. But its price negotiations with investors reportedly failed because they demanded a more than 2.1 percent spread. The demand suggests that the environment is not favorable for Korea to borrow foreign currency. Amid news reports on this, the won dropped by W14 against the dollar from the previous day, closing at W1,109.5 against the greenback.
(englishnews@chosun.com )
|
