Currently the global economic events are happening in a fast pace. Even reporters seem to have trouble catching up events happening. So, I could not find articles from reliable sources that were talking about Korean economic issues with different views. Instead, I found two articles one from a Korean source and another from a foreign source, reporting on how the Korean firms are reacting to the European debt crisis. One article is from the Wall Street Journal and the other is from Joongang Daily.
According to the Wall Street Journal's article, Korean firms are facing high premiums for dollar bond deals. Due to increased uncertainties over Europe and the United States, borrowing has become increasingly harder for bond issuers. Dollar bond dealing in Korea has stopped to standstill. Koreans now prefer to buy non-traditional funding sources like yen-denominated bonds instead of dollar-denominated bonds. Since the demand for dollar bonds are decreasing to zero, the interest costs have risen. Korean firms have reacted to this by decreasing the number of bonds they issue. To stop issuing the number of bonds as a reaction to increased bond interest costs can only happen if Korean firms have enough foreign-currency. It seems that Korean firms mananged to prepare for the European debt crisis.
After reading the Wall Street Jounral's article, readers will expect the Korean firms to reduce spending as they have decreased borrowing. However, the Joongang Daily reports show different actions from Korean firms. The Joongang Daily's article writes that Korean firms are planning to purchase European firms. Even though their income is decreasing, the Korean firms are spending more. They seem to have plenty of foreign currency to plan such purchases.
However, it should not simply be understood as Korean firms having enough foreign currency reserves but also as Korean firms having increased risk of depleting foreign currency reserves.
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