The government said on the 23rd that it issued a total of $1.7 billion in foreign exchange equalization fund bonds (FX stabilization bonds).
$1 billion in dollar-denominated bonds and 110 billion yen in yen-denominated bonds (worth $700 million).
The dollar FX stabilization bonds were all five-year maturities, and the yen FX stabilization bonds were issued in two-, three-, 5.25-, and 10-year maturities.
The dollar FX stabilization bonds lowered the spread over U.S. Government Bonds to a record low of 0.17 percentage points. The yen FX stabilization bonds also carried low interest rates in the 1% range, with a lower spread than the yen FX stabilization bonds in 2023.
The Ministry of Economy and Finance said, "Issuing our FX stabilization bonds for the first time with a spread in the 0.10 percentage-point range compared with U.S. Government Bonds means our economy's fundamentals have matured to a higher level," adding, "It reflects an improvement in the global market's assessment of the situation of the Korean economy and its policy direction." The ministry added significance by saying, "Even compared with bonds from other institutions in major countries, our FX stabilization bonds have a low spread," and "We were able to confirm the credibility of the Korean economy."
Including these dollar- and yen-denominated issues, the government sharply increased foreign exchange reserves with a total of $3.4 billion in FX stabilization bonds this year. Earlier, in the first half, the government issued euro-denominated FX stabilization bonds worth €1.4 billion (about $1.7 billion).
On an annual basis, it is the largest since 1998 ($4.0 billion). At that time, the purpose was to make up for a shortage of foreign currency during the foreign exchange crisis, while now the focus is on raising external credibility by a notch.
It also stands out that, for the first time ever, FX stabilization bonds denominated in the three key reserve currencies (dollar, euro, yen) were all issued in a single year. An official at the Ministry of Economy and Finance (MOEF) said, "We confirmed solid demand for our FX stabilization bonds in all of the so-called G3, the world's three major financial markets, and diversified the currency composition of foreign exchange reserves."