Korea's external debt surges to new high in 3rd quarter

Korea's external debt hit a new record high in the third quarter of this year due mainly to a rise in investment in local bonds by foreigners, the government said Tuesday.

The country's external debt reached $419.4 billion as of the end of September, up $3.6 billion from three months earlier, according to the Ministry of Strategy and Finance.

"Investment by foreigners in bonds issues by local banks and companies rose by $9.5 billion from three months earlier, reflecting improvements in the country's economic fundamentals and financial stability," the ministry said in a press release.

The ministry noted the increased value of won-based bonds due to the recent appreciation of the local currency against the U.S. greenback also contributed to the overall increase of external debt.

The country's short-term foreign debt dropped by $8.1 billion from the second quarter to $132.6 billion. The portion of short-term debt in total external debt also dwindled from 33.8 percent at the end of the second quarter to 31.6 percent as of the end of the third quarter.

Korea's loans and investment in foreign markets also grew $17.9 billion from three months earlier to $526.6 billion at the end of September, further improving its ability to cope with a sudden outflow of its short-term foreign debt.

"The government will continue to closely monitor inflows and outflows of foreign debt while preemptively dealing with any potential risks to the country's financial stability," the ministry said. (Yonhap)