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Staff Reporter
Korea returned to being a net creditor country in September, with its net external position (NEP) swinging into positive territory for the first time since September 2008 due to a continuing rise in its trade surplus.
The Bank of Korea (BOK) reported Tuesday that the country's NEP ― its external credit minus external liabilities ― stood at $2.98 billion in September.
In the wake of the global financial crisis, the country became a net debtor country in September 2008 for the first time in eight years. In the third quarter of 2008, the country's foreign debt reached a record high of $426.13 billion on the back of snowballing overseas borrowing by banks to handle dollar forwards sold by local exporters, which triggered a collapse of the currency market.
But since the beginning of this year, its external position has improved on an increasing trade surplus and currency reserves.
``External credit has increased at a much faster pace than external liabilities on the strength of a jump in foreign reserves caused by the rising trade surplus,'' a BOK economist said.
Korea's external liabilities increased by $18.9 billion to $397.5 billion in September from three months earlier, while external credits jumped by $28.3 billion to $404.9 billion during the same period.
The nation's long-term foreign debt increased by $20.06 billion to $251.2 billion between July and September, while short-term debt declined by $1.14 billion to $146.3 billion. The ratio of short-term debt to the total fell by 2.1 percentage points to 36.8 percent.
Foreign reserves reached their second-highest level ever in October as a weaker U.S. dollar boosted the conversion value of assets in other currencies. The reserves totaled $264.19 billion in October, marking the eighth straight monthly gain.
The accumulated trade surplus from January through October reached US$34.5 billion, and should exceed a record $40 billion for the entire year, according to the Ministry of Knowledge Economy.
The balance of net cross-border investment ― Korea's outbound investment minus inbound foreign investment ― swung into negative territory in September due to a massive capital inflow triggered by the bullish equity market and the won's appreciation.
Outstanding inbound foreign investment here totaled $637.6 billion in September, up $97.8 billion from three months earlier. Korea's outstanding outbound investment rose by $46.5 billion to $577.6 billion.
``The country saw a massive capital inflow as foreign investors bought local stocks and government bonds,'' the BOK economist said.
kjk@koreatimes.co.kr
