(Photo = Yonhap News)
The Bank of Korea announced on the 26th that it plans to implement a simple purchase of KTBs worth 5 to 7 trillion won in the first half of this year. An official from the BOK explained, “It is aimed at stabilizing market interest rates, which have increased volatility as the amount of KTB issuance has increased considerably.”
The size of the purchase date will be announced at the time of the announcement, and it is planned to take additional measures to stabilize the market whenever necessary, apart from this purchase. The BOK bought 11 trillion won worth of government bonds last year, and then started to buy more this year.
This is because the financial market is fluctuating with the recent market interest rate soaring. Korea’s 10-year Treasury bond rate was also the highest since April 23, 2019 (1.923% a year) at 1.922% per year on the 22nd. On this day, it soared to 1.98% a year during the intraday, close to 2% a year.
This jump in interest rates is the effect of the government and the ruling party on the additional budget (additional budget) to finance the 4th emergency disaster support fund. There is a high possibility that a significant amount of additional funds will be raised as deficit government bonds, and as the amount of government bonds issued increases, the price of government bonds will fall. As government bond prices fall, government bond yields rise.
Here, interest rates on US Treasury bonds have risen significantly. On the 25th, the 10-year Treasury bond rate rose 0.158 percentage points to close at 1.53% per year. It has exceeded 1.5% per year. During the intraday, it soared to 1.61% per year. The interest rates of Korean government bonds, which show the same trend as that of US government bonds, are also showing an upward trend on this day.
Reporter Kim Ik-hwan [email protected]
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