Korea increases limit on document-free transfers of currency overseas

The government argues that the various foreign currency restrictions were relics that were implemented from the 1960s when the country was still short on foreign currency reserves.

Dollars stack up at Hana Bank. [YONHAP]

Offshore wires of up to $100,000 won't have to be reported to financial authorities from as early as end of June. The amount has been doubled from the previous $50,000.

Companies will have report to the Finance Ministry and the Bank of Korea on foreign currency loans amounting to $50 million, rather than the previous $30 million.

The Finance Ministry on Friday said the changes to foreign currency regulations are part of efforts to boost investments and eventually prop up the Korean economy.

“Recently the difficulty of the real economy is deepening with exports and investments shrinking,” said Finance Minister Choo Kyung-ho on Friday. “Due to high interest rates and external and internal uncertainties, investment confidence is contracting fast.”

Choo promised regulatory changes to turn the situation around.

“Foreign currency regulations, whose customary practices have been formed over a long period, need overall improvement,” Choo said. “As such, we have decided to make those changes step by step, prioritizing regulatory reforms that affect people’s daily lives and corporate investment.”

The government argues that the various foreign currency restrictions were relics that were implemented from the 1960s when the country was still short on foreign currency reserves.

It argues that today, the same regulations have been applied without the consideration of the economic expansion that the country has seen.

Korea’s economy has expanded from $497.3 billion in 1999 to $1.6 trillion in 2019.

Korean spending on overseas studies, as well as overseas trips and individual transfer income, has more than tripled between 1999 and 2019 from $7.2 billion to $42.4 billion. Koreans' overseas securities investments surged from $8 billion to $577.8 billion during the same period.

The Korean government has recently been faced with a decelerating economy.

The Korea Development Institute on Thursday released an economic outlook that has been slightly modified. The annual growth projection remained unchanged from its last projection made in November at 1.8 percent.

However, the state-owned think tank has lowered its growth outlook for the first half from 1.4 percent to 1.1 percent.

The Finance Ministry outlook is slightly more conservative at 1.6 percent while the Bank of Korea projects growth of 1.87 percent. The International Monetary Fund also projects growth at 1.7 percent.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]