Korea May Regulate Borrowing

Over the last two years, South Korea's overseas borrowings more than
doubled, to $388 Billion. Nervous, perhaps, that Korean businesses may
be overextending themselves, the government is seeking to regulate such activities. Based on the way the forex markets
responded to the news, it must be perceived that borrowing abroad is
helping the Korean economy. On the one hand, if loans are denominated
in foreign currency and must then be converted to local currency, this
would exert upward pressure on the Korean Won. On the other hand, this
also requires more local currency to be printed, which fuels inflation. Much
of the borrowings are being undertaken by shipbuilders who are trying
to hedge their exposure to a rising Dollar. The Edge Daily reports:

Some
analysts say the forward-trading-linked borrowing is not as big a
problem as borrowing to fund consumption would be, but the government
is worried that the sharp rise in debt over a short period of time
could undermine the local financial system.

Read More: South Korea says not planning direct FX curbs