Korea to curb foreign currency loans

The Bank of Korea will restrict banks from giving foreign currency loans to local companies for domestic use from July 1, as part of efforts to protect the local market from big swings in foreign exchange rates.

The plan is part of a set of regulations aimed at reducing Korea’s dependence on short-term foreign borrowings which exposes the market to volatility in times of crisis. 

“We expect to lower short-term foreign debt and reduce local companies’ exposure to currency risks,” the BOK said in the statement. 

New rules allow banks to roll over foreign currency loans to local companies only if those firms can’t raise funds overseas. Foreign currency loans increased $2.19 billion between January and April this year to $22.53 billion, the central bank said.

Foreign exchange analysts say the move is related to China’s recent decision to ease the yuan’s peg against the U.S. dollar which may push the won to appreciate accordingly.

Bank of Korea Governor Kim Choong-soo (second from right) meets financial experts in Seoul on Wednesday. Yonhap News

U.S. embassy holds Sijo contest

“Sijo” has been the most popular poetic form in Korea for centuries. Like haiku and tanka, its roots are in ancient Chinese verse.

To explore this ancient poetic form, the U.S. Embassy organized an English Sijo Writing Contest with 22 Korean high school students who are fluent in English and have a strong understanding of the traditional form.

The contest was arranged similarly to that of the state civil service exams given during the Goryeo and Joseon Dynasties. 

High school students brainstorm ideas for the U.S. Embassy’s English Sijo Writing Contest related to the main theme of “hope.” Courtesy of U.S. Embassy

Ruling camp refuses to back down on Sejong

Despite a parliamentary panel rejection and escalating public criticism, Lee Myung-bak does not appear ready to give up on his bid to kill a former government-led plan to relocate part of the administration out of Seoul. 

In a meeting with high-ranking government officials and ruling party leaders Wednesday, Prime Minister Chung Un-chan asked the National Assembly to bring the controversial bills related to revising the Sejong City project up again for a full-house vote, claiming “such a historic issue” deserves attention from all legislators. 

The 31-member Assembly committee on land and maritime affairs voted down the bills Tuesday, thwarting Lee’s determination to overthrow his predecessor’s project that aimed to develop a second administrative city in the long-underdeveloped Chungcheong region.

First sought by the administration of Roh Moo-hyun in 2005, the project -- named after the creator of the Korean alphabet -- is widely popular among residents of the province as well as progressive political forces who support balanced regional development. 

Prime Minister Chung Un-chan (third from left) and other Cabinet members attend a meeting with ruling party leaders Wednesday. Yonhap News

Korea’s import market shifts focus

As imported automobiles become increasingly commonplace in Korea, the market is shifting towards smaller, cheaper vehicles.

According to the Korea Automobile Importers and Distributors Association, vehicles equipped with between 2- and 3-liter engines account for 43.3 percent of the market for the first five months of the year.

In comparison, such vehicles took up 35.8 percent of the market in 2008 and 38.4 percent in 2009.

As the volume of such vehicles sold increase, mid-sized vehicles are also dominating the top 10 bestseller list.

For the first five months of the year, eight of the top 10 bestsellers were those with engine capacities between 2 and 3 liters with the Mercedes-Benz E300topping the list.

In both 2009 and 2008, only six such vehicles made it into the top 10 list. 

The Mercedes Benz E300 (top) and the Toyota Camry, the two bestselling imported cars for the first five months of the year.

Saab hires Ferrari designer Castriota to speed turnaround

Jason Castriota, the U.S. designer known for creating the Ferrari P4/5 and Maserati GranTurismo, will head Saab Automobile’s design team to help the Swedish carmaker take on Bayerische Motoren Werke AG and Audi AG.

Jason Castriota

The first assignment for Castriota’s design firm is to create an upscale version of Saab’s current 9-3 model, scheduled for release in 2012, the 36-year-old said in an interview. Aerodynamics will be a focus of the new design, he said.

“It’s absolutely vital we get this car right,” Castriota said from New York late yesterday. “This is Saab returning to its roots, not having to worry about being part of a much larger machine that they were before in the GM organization.”

Saab, sold by General Motors Co. to Dutch supercar maker Spyker Cars NV in February, aims to become profitable by 2012. The turnaround strategy includes releasing premium models more distinct and sporty in their design than when Saab was under GM, according to Spyker Chief Executive officer Victor Muller.

Popular new cars boost Kia Motors

Kia Motors Corp. is giving the country’s dominant carmaker Hyundai Motor Co. a run for its money in the domestic market.

Fueled by the popularity of recently launched vehicles such as the mid-sized sedan K5 and the compact sport utility vehicle Sportage R, Kia’s share of the monthly domestic market rose to 34.5 percent in May.

Last month’s figure is the second highest recorded since Hyundai acquired controlling shares of the company in 1998. The highest monthly market share for Kia since the takeover was 35 percent recorded in November 2008.

As its market share rises, Kia vehicles are eating into sales of rival models produced by the company’s sister carmaker Hyundai Motor Co.

Last month, Kia’s K7 full sized sedan outsold the Hyundai Grandeur by nearly 1,000 units, while the Sportage R compact sport utility vehicle also outpaced its Hyundai counter part by similar margins.

With the launch of the K5 last month, Hyundai Sonata’s monthly sales figure fell below 10,000 units for the first time since its launch last September. 

Kia Motors Corp.’s K Series vehicles — K5 and K7 — that are leading Kia’s rapid rise in the domestic market. (Kia Motors Corp)

LS to supply GM with hybrid car parts

LS Industrial Systems Co., a Korean electric equipment maker, agreed to supply components for General Motors Co. hybrid cars.

LS Industrial and GM will form a long-term partnership, the Korean company said in an e-mailed statement today without disclosing financial terms. 

LS Industrial also said it aims to win at least 1 trillion won ($842 million) in orders from its green car parts business by 2013.