SEOUL, Aug 20 (Reuters) - South Korea’s ratio of short-term external debt to its foreign reserves edged up in the second quarter on the increased strength of the local currency against the dollar during that period as well as offshore demand for won-denominated bonds.
The ratio of short-term external debt edged up to 35.9 percent of the country’s foreign reserves as of the end of June from a 34.9 percent ratio at the end of March, data from the Bank of Korea showed on Wednesday.
Short-term external debt owed by South Korea inched up to $131.8 billion by the end of the second quarter this year from $123.8 billion three months prior, while foreign reserves stood at $366.6 billion at end-June, up from $354.3 billion at end-March.
The won rose more than 5 percent during the second quarter, driven by an uninterrupted string of current account surpluses and improving economic fundamentals.
The central bank data also attributed the rise in short-term external debt to onshore demand for foreign currency funds, similar to reasons behind increases in the first quarter.
Asia’s fourth-largest economy had the world’s seventh-largest foreign reserves as of the end of June.
Total external debt carried by South Korea was $442.2 billion by the end of June from $425.4 billion at the end of March, the data showed. (Reporting by Christine Kim; Editing by Ken Wills)