Seoul: South Korea's central bank announced a decision to relax regulations on foreign currency inflows, allowing export companies to secure foreign currency loans for domestic facility investments. This move aims to address imbalances in the foreign exchange market and manage the pressures on the weakening won.
According to Yonhap News Agency, the Bank of Korea (BOK) stated that the local currency has been under pressure due to domestic political issues and global trade uncertainties. Previously, foreign currency loans were primarily restricted to overseas purposes, with small and medium-sized manufacturers being notable exceptions. Companies were typically required to use foreign currency funds for overseas investments or purchasing foreign goods.
Under the new measure, export companies can now obtain foreign currency loans for domestic facility investments. The condition for these loans is that the amount should not exceed the company's export performance over the past year or their projected performance for the current year, as outlined by the BOK.
This regulatory change is part of a broader package of policy actions that the government announced in December to facilitate the inflow of foreign currency. The government's initiative aims to stabilize the market and support export companies in navigating the challenging economic environment.