South Korea cancels the 14-year ban on "Kimchi Bonds".

Gate News bot message, the Financial Times reported that the Bank of Korea has announced the termination of a 14-year ban on domestic Financial Institutions purchasing "Kimchi Bonds" (offshore issued foreign currency bonds intended to be exchanged for Korean won).

The Bank of Korea implemented the ban in 2011 due to concerns about currency mismatch risks. Currently, as retail investors have entered the overseas stock market and the dollar stablecoin market in large numbers, the Korean won has weakened, and foreign currency liquidity remains tight, prompting the Bank of Korea to make policy adjustments.

The Bank of Korea stated that this measure helps to improve the liquidity of foreign currencies, alleviate the depreciation pressure of the Korean won, and address the imbalance between foreign exchange supply and demand. On Monday, July 1, the exchange rate of the Korean won reached its highest point in nearly eight months.

South Korea's foreign exchange reserves in May have fallen to the lowest level in five years. In addition to lifting the ban on "Kimchi Bonds," the South Korean government has also implemented measures such as raising hedging limits and easing foreign currency loan restrictions. Analysts point out that the number of domestic companies issuing "Kimchi Bonds" is expected to increase. However, due to the higher cost of dollar financing compared to the won, domestic companies are maintaining a cautious attitude towards issuing "Kimchi Bonds" in the short term.