South Korea Lifts 14-Year Ban on "Kimchi Bonds" to Attract Hedging Capital Inflows

Odaily Planet Daily – Driven by the speculative boom in US dollar stablecoins, South Korea has lifted a 14-year ban on domestic financial institutions purchasing "kimchi bonds" (foreign currency bonds issued onshore, intended to be converted into Korean won) to attract hedging capital inflows. Previously, the Bank of Korea banned local investment in such bonds in 2011 due to concerns over currency mismatch risks. Now, with retail investors flocking to overseas stock markets and the US dollar stablecoin market, the Korean won has weakened and foreign currency liquidity has become insufficient, prompting the central bank to adjust its policy. The Bank of Korea stated that this move will improve foreign currency liquidity, ease depreciation pressure on the won, and address the imbalance in foreign exchange supply and demand. (Financial Times)