Companies postponing their investments due to exchange rate risks

Companies are postponing investments and increasing cash as economic conditions deteriorate.

Businesses large and small are hastily increasing their cash as economic conditions deteriorate.

Large companies are postponing their investments while selling real estate assets. KAL Hotel Network sold its Jeju KAL hotel for 95 billion won in August, when Mando sold its global R&D center Pangyo for 400 billion won and SK Hynix and S-Oil bought 140 billion won and 50 billion respectively. won of corporate bonds. Earlier this month, Hanwha Solutions canceled its 160 billion won investment plan for nitric acid production. SK Hynix decided in June not to expand its facilities in Cheongju.

The won-dollar exchange rate is rising rapidly along with interest rates amid another economic recession, which is also seriously affecting startups. The number of startups in South Korea has increased a lot in recent years and most of them have not yet established their profit structures. The investments from outside, essential for the structures, are becoming more and more difficult to obtain.

The government has recently asked banks to appropriately manage their business loans as well as household loans. Banks are tightening lending, with the Fed likely to raise its benchmark rate by 0.75 percentage points four times in a row.

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