Authorities to Utilize Remaining 17 Trillion Won in Crisis Support Funds Amid Soaring Exchange Rates

Support for Companies Impacted by the High Exchange Rate
Pan-Governmental Comprehensive Plan Initiated
Assistance for Import and Export SMEs
Utilizing a 24 Trillion Won Support Program

Financial authorities are utilizing a KRW 24 trillion crisis response financial support program to assist companies impacted by the strong won-dollar exchange rate. The scope of support has been expanded to include not only companies affected by the Middle East crisis, but also small and medium-sized enterprises (SMEs) that are now facing increased import costs for raw materials and components due to recent currency fluctuations. In addition, the government has begun formulating a comprehensive, pan-government support plan for companies suffering from the high exchange rate.

According to relevant ministries and the financial sector on June 18, financial authorities are now applying the support program—originally operated by policy finance institutions to aid companies impacted by the Middle East crisis—to those affected by the strong exchange rate as well. This program was expanded to KRW 24.3 trillion in March to help companies suffering from the prolonged Middle East situation. Currently, about KRW 17 trillion remains available for support.

Accordingly, policy finance institutions are seeking to ease liquidity pressures on companies by providing interest rate support, extending loan repayment periods, and increasing lending limits. The authorities plan to utilize the remaining KRW 17 trillion in available funds first and will consider raising additional funds if necessary.

Comprehensive measures to support companies affected by the strong exchange rate are also being pursued at the pan-government level. Key ministries, including the Ministry of Economy and Finance and the Financial Services Commission, are considering providing management stabilization funds for SMEs suffering from the prolonged high exchange rate. They are also examining the additional support capacity, funding, and detailed programs available at each policy finance institution, including the Export-Import Bank of Korea, Industrial Bank of Korea, and Korea SMEs and Startups Agency.

The government is considering expanding the scope of support to include not only import-oriented SMEs but also export-oriented companies with a high proportion of raw material imports. A government official stated, "Export companies cannot avoid the impact of a rising exchange rate, as they also need to import raw materials. We cannot limit support to importers alone; companies with a high proportion of raw material imports face similar challenges, so we are reviewing a comprehensive support program." However, the official noted that the detailed announcement schedule is still being coordinated.

Policy finance institutions are also reviewing the possibility of launching separate support programs to address the high exchange rate. Institutions such as the Export-Import Bank of Korea are considering expanding import finance support for SMEs facing increased import financing burdens due to the strong exchange rate and high oil prices. Options being discussed include raising loan limits or extending support periods.

The government's move to prepare support measures for companies affected by the strong exchange rate stems from the judgment that rising won-dollar rates are increasing import costs for raw materials and logistics, thereby undermining SME profitability. Import-oriented companies directly bear the extra costs from exchange rate increases when bringing in raw materials and goods from overseas. Export-oriented companies, which often import raw materials and components for processing and sales, are also experiencing greater working capital burdens due to rising exchange rates.

SMEs, in particular, find it difficult to immediately reflect exchange rate increases in their supply or sales prices. When both raw material import costs and logistics expenses rise at the same time, profitability deteriorates, and short-term working capital needs inevitably increase. As liquidity pressures mount, so does the burden of repayment, which could lead to financial distress. Thus, the intention is to proactively prevent a credit crunch through policy-based financial support.

In June this year, the won-dollar exchange rate surpassed 1,520 won, reaching its highest level in 28 years since the 1998 foreign exchange crisis. During intraday trading, it exceeded 1,560 won, the highest since March 2009 at the time of the global financial crisis. On June 17, the exchange rate closed at 1,513.4 won, up 1.8 won from the previous day.

This content was produced with the assistance of AI translation services.