Korean corporate FX losses snowball to $1bn
Leveraged knock-in/knock-out currency products hit small exporters
South Korean small exporters are estimated to have racked up close to $1 billion in losses from knock-in/knock-out (Kiko) currency option products in the past few months, with domestic banks also suffering from the knock-on effects. Sources put the notional amount of the contracts in question at $10 billion.
Losses from Kiko hedges are expected to rise to 1.7 trillion Korean won ($830 million) says an October 13 report submitted by the Small and Medium Business Administration in Seoul to Grand
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