Recent Shifts in Capital Flow Patterns in Korea: An Investor Base Perspective

By Niels-Jakob H Hansen, Signe Krogstrup

November 27, 2019

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Format: Chicago

Niels-Jakob H Hansen, and Signe Krogstrup. Recent Shifts in Capital Flow Patterns in Korea: An Investor Base Perspective, (USA: International Monetary Fund, 2019) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Koreas cross border capital flows have tended to respond negatively in global risk-off episodes, resulting in volatility in the foreign exchange market and occasional policy responses in the form of foreign exchange interventions. We study the relationship between Korean capital flows and global volatility up to 2018. The response of capital flows during risk-off episodes have become more muted over time, and occasional safe-haven type flows into Korean bond markets have helped counterbalance the tendency for portfolio investors to leave. We describe these changing patterns and relate them to shifts in Korea’s domestic investor base. We discuss whether they reflect a sustained shift in the sensitivity of Koreas capital flow pressures to global risk-off episodes, and implications for monetary and exchange rate policies.

Subject: Balance of payments, Capital flows, Capital outflows, External position, Foreign assets, Foreign currency exposure, Foreign liabilities, Money

Keywords: Asset, Balance sheet data, Capital, Capital flow, Capital flows, Capital outflows, Flow response, Flow volatility, Foreign assets, Foreign currency exposure, Foreign liabilities, Global, Haircuts investor, Institutional investor, Investor, Net capital, Portfolio risk management perspective, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/262
Stock No:

WPIEA2019262
ISBN:

9781513519937
ISSN:

1018-5941

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