Korea moves to restrict FX derivatives leverage
Bank of Korea and Ministry of Strategy and Finance cut back leverage caps and limit corporate hedging of currency risks to 100% from 125% of exposure
Korean exporters are set to face new limits when managing their foreign exchange (FX) exposure, with the government planning to implement a slew of measures aimed at restricting corporate hedge ratios to no more than their real transaction amount.
The move, which some parties say is also aimed at stemming volatile capital flows, may result in declining profits for banks that offer hedging facilities to corporates in the country, although some parties believe it may make business more sustainable
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