By Na Jeong-ju
Staff Reporter
Banks are making all-out efforts to secure enough dollars amid weakening investor sentiment on the Korean currency and the toughening stance of regulators on short-term dollar borrowing from overseas markets, bank officials said Tuesday.
As demand for dollars is growing here, banks are considering reducing dollar-term assets and issuing bonds on overseas markets to increase their dollar holdings.
``Investors should shoulder higher costs to change the won into dollars, while changing dollars into the won has become cheaper here as more firms are rushing to buy dollars,'' a Kookmin official said. ``For their part, banks are seeking to issue structured securities for overseas investors and sell dollar-term assets to secure more greenbacks.''
Bankers say massive selling of Korean stocks by foreign investors and the government's stricter rule on short-term overseas borrowing of dollars have caused a shortage of dollars on the market.
``The Bank of Korea (BOK) has strengthened regulations on short-term dollar borrowing, while reducing its intervention in the swap market, causing market instability,'' an industry source said. ``Such policies have made it more difficult for banks to raise funds from overseas markets, and it will become even harder.''
Woori Bank said it plans to issue structured securities for foreign investors to raise more dollars. The outstanding overseas bond issuance by Woori has reached $5.5 billion, and some $200 million worth of bonds will mature by the end of January.
Shinhan Bank will also dispose of some dollar assets soon on expectations that the dollar will gain further strength against the won. It has issued overseas bonds worth $3.3 billion, and should buy back $80 million won worth of bonds next month.
``In the short term, it will not be that difficult to cover maturing bonds,'' a Shinhan official said. ``However, we are considering taking measures to reduce dollar loans to make up for a possible shortage of dollars in our coffers.''
Analysts say the won is likely to lose further against the dollar and other major currencies. The won-dollar rate has risen above 930 won per dollar for the first time in two months and the won-yen rate rose above 860 won against 100 yen, the lowest level for the won in one and a half years.
Foreign investors have withdrawn their investments in local stocks to pay off their debts, or to relocate their global investments, causing a sharp correction of stock prices here.