South Korea's external debt hit a record high in 2012 on foreign investors'
buying spree of local bonds, but its short-term foreign debt fell to a six-year
low, the central bank said Wednesday.
The country's external debt
totaled US$413.4 billion as of the end of December, up $14.7 billion from a year
earlier, according to the Bank of Korea (BOK).
It marked the first
time that the country's yearly foreign debt surpassed the $400 billion
mark.
But in the fourth quarter, Korea's foreign debt declined by $5.9
billion from a quarterly record high of $419.4 billion in the third quarter as
banks repaid short-term foreign borrowing amid tighter rules on bank's foreign
exchange derivatives.
"Powerful monetary easing by advanced economies
led more foreign investors to increase purchases of Korea's treasuries and
monetary stabilization bonds last year," Kim Young-hun, the head of the BOK's
international investment position team, told reporters.
Last year,
foreign investors snapped up Korean bonds as they were seen as attractive amid
aggressive monetary easing moves by major economies and a spate of credit rating
upgrades for Korea.
Despite the rising trend of the external debt,
Korea saw its short-term debt decline to a six-year low in 2012, indicating that
the structure of its foreign debt improved.
Korea's short-term foreign
debt fell $10.7 billion on-year to $126.7 billion in 2012. It marked the
smallest short-term debt since $113.7 billion in 2006.
Accordingly,
the ratio of the short-term debt against the foreign reserves came in at 38.7
percent as of end-December, down 6.1 percentage points from the previous year.
It marked the lowest ratio since 31.3 percent at the end of 2005.
The
rate of the short-term debt against Korea's total debt reached 30.6 percent as
of end-2012, down from 34.5 percent from the previous year and the lowest since
29.7 percent in 1999.
Korea's high short-term foreign debt used to be
a major headache whenever a financial crisis cropped up as a surge in foreign
debt left local banks vulnerable to external shocks.
South Korea's net
external credit reached $122.5 billion as of the end of last year, up $24.5
billion from the previous year, it noted. The 2012 reading marked the largest
amount in six years.
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