By Yoon Ja-young
Staff Reporter
The government will permit state-run enterprises to borrow money or issue more bonds overseas to encourage capital inflow to offset dollar shortage in keeping with the current account deficit and foreign investors' selling off of local stocks.
According to the Ministry of Strategy and Finance, Wednesday, it will allow state companies to borrow or issue bonds overseas to encourage the inflow of dollars. The government expects the measure to help keep the local currency from losing value.
Initially, the Korean won gained strength amid abundant inflow of dollars on booming exports, but the government had to worry about the negative effects of this on exporters.
Things have changed drastically, however, over the last few months. Soaring oil prices and massive foreign selling of Seoul stocks quickened capital outflow, weakening the Korean won and thus adding to inflationary pressure.
The government has been intervening in the currency market recently to stabilize the won-dollar rate, but the measure will increase dollar supply in the market. It expects an inflow of $4 billion in the latter half of the year, according to the ministry.
The won-dollar rate once fell below 1,000 Wednesday, for the first time since last April, on the strong intervention.