Central bank warns of potential risks from net surge in foreign assets

South Korea's high level of overseas assets has bolstered external soundness, but the rapid increase could lead to prolonged capital outflows that may put downward pressure on the local currency and cause other side effects, the central bank said Wednesday. The country's net foreign assets (NFA) has been on a constant increase over the past several years to reach an all-time high of $1 trillion as of June 2025, equivalent to 55 percent of its gross domestic product, on the back of the steady current account surplus and rising overseas investment by pension funds. "While the increase in NFA contributes positively to external soundness, it also carries negative implications, such as the weakening of the domestic investment base due to sustained capital outflows," the Bank of Korea (BOK) said in a report. Continued overseas investments by pension funds and institutional investors could also lead to persistent demand for U.S. dollars, putting downward pressure on the Korean won, it added. The BOK noted that structural changes in the composition of net foreign assets could create new imbalancWeiter zum vollständigen Artikel bei Korea Times Weiter zum vollständigen Artikel bei Korea Times