As South Korea’s banks push for finance that works, they face new risks from the way they count risk-run assets. The dollar grows strong. Banks must keep close watch to keep their funds safe.
Rising Dollar Pressure Complicates Asset Risk Management
The won and dollar exchange rate jumps fast. Mid-November 2025, the rate hit 1,470 won per dollar. This level was last seen in April 2025. In one week, the won lost more than 28 won per dollar. US policy adds doubt. The stronger dollar lifts the value of assets and debts set in dollars. Banks check their funds using the CET1 ratio. This ratio links core funds with risk-run assets. A rising dollar raises risk numbers. Every 100 won jump cuts the CET1 ratio by about 25 basis points. This rate change risks banks’ fund strength.
Productive Finance Expansion Adds Another Layer of Complexity
The government now pushes finance that builds key areas of the economy. Banks lend more to strategic industries. This step helps growth but risks more defaults. Banks now hold riskier loans than before. They must balance big loans with solid funds. Regulators plan to cut the risk weight on some bank equity from 400% to 250% in early 2026. This plan gives banks some fund relief. Yet, loans in less secure areas force banks to set aside extra loss cash, which cuts profits and weakens funds.
Proactive Risk Monitoring and Currency Hedging in Focus
Banks now work to watch their risks day by day. Big groups, such as KB Financial Group, run emergency plans. Senior managers and teams sit together to check currency moves and asset loads. They work on foreign funds and hedging plans to cut loss. Other banks, like Shinhan Bank and Hana Bank, check daily signs from exchange rates, interest on foreign funds, and cash flows. Crisis plans spark quick meetings if risks rise. Treasury teams use swaps and other tools to cut exposure and keep cash tight.
Broader Economic Outlook and Financial Sector Implications
Market forces now push the dollar high. US debates on budgets, tariffs, and rates add to the strain. Brief government stops and tight funds in US markets make more investors ask for dollars. This puts pressure on emerging currencies like the won. Banks must watch risk and plan their funds while growing finance that builds the economy. The central bank and rules adjust to help new loans, and banks work hard to balance risk with profit for their owners.
Conclusion
The strong dollar and new finance plans force banks to work hard on counting risky assets. Old types of loans mix with loans for new areas of growth. Banks focus on close risk control, hedging plans, and fund checks. This mix shows trends in changing how assets work, as banks grow while keeping risks low.
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📝 About This Article
This article was generated by Hivebox AI in collaboration with AuCan Gold.
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