South Korea’s Ministry of Economy and Finance convened financial authorities to assess rising long-term interest rates in major economies and their potential effects on domestic markets, borrowing costs and the real economy. The authorities will closely monitor the bond market and prepare support measures for small businesses, lower-income households and other vulnerable borrowers to prevent higher rates from creating excessive repayment burdens. Participants attributed the increase in ultra-long-term yields to expanding sovereign debt issuance, increased corporate bond issuance by global artificial intelligence companies and continued uncertainty in the Middle East. They also noted that the won had strengthened to the KRW 1,300 range against the U.S. dollar after exceeding KRW 1,550 in early July, but agreed to remain alert to volatility from geopolitical tensions and monetary policy developments. The authorities assessed external soundness as strong despite a decline in net international investment assets, citing a USD 2.3 billion quarterly increase in net external claims and a record USD 191 billion current account surplus in the first half of 2026. They will continue managing household debt, whose ratio to gross domestic product fell to 85.3% in the first quarter despite an increase in total debt, while supporting genuine borrowers’ access to funding and implementing previously announced safeguards for single-stock leveraged products.
2026-08-21Ministry of Economy & Finance (South Korea)
South Korea’s Ministry of Economy and Finance reviews long-term interest rate risks and plans vulnerable borrower support
South Korea’s Ministry of Economy and Finance and other financial authorities reviewed the domestic risks from rising long-term interest rates overseas and will prepare support for small businesses and vulnerable borrowers. They will maintain close monitoring of bond and foreign exchange markets while continuing to manage household debt and implement safeguards for single-stock leveraged products.