South Korea’s bond market has witnessed a significant surge in foreign investment this week, with inflows exceeding 4.4 trillion won ($2.9 billion), according to financial authorities on Thursday. This influx coincides with the country’s phased inclusion into the FTSE Russell World Government Bond Index (WGBI).
The eight-month inclusion process began on Wednesday, a strategic move expected to bolster stability within the South Korean bond and foreign exchange markets.
Authorities reported that foreign investors, particularly those from Japan, actively purchased 4.4 trillion won worth of South Korean treasury bonds between Monday and Wednesday.
“The government will closely monitor capital inflows through a joint task force involving relevant agencies,” stated Finance Minister Koo Yun-choel.
Koo delivered these remarks during a macroeconomic policy meeting. Attendees included Bank of Korea Gov. Rhee Chang-yong, along with the heads of the Financial Services Commission and Financial Supervisory Service, as confirmed by the Ministry of Finance and Economy.
Officials also noted a decrease in volatility within the government bond market, despite ongoing uncertainties stemming from Middle East tensions. This stabilization follows an emergency buyback of 5 trillion won.
