Interest rates hit yearly low

Interest rates on national treasury bonds have fallen to the 6-percent range for the first time this year, their lowest level since Jun. 17, 1999.

Analysts attributed the rapid decline to the fact that financial institutions are increasingly favoring non-risk assets.

The Korean won also reversed its downward course against the dollar Monday and closed at 1,217.10 won, up 7.6 won from the previous day, and setting a new yearly high.

On the bond market, interest rates on national treasury bonds with a maturity of three years stood at 6.91 percent, down 0.09 percentage points from the previous day. The rate on three-year corporate bonds also dropped 0.05 percentage points from a day earlier to close at 8.16 percent.

A Bank of Korea official said that previously when the interest rates of bonds fell, investors generally sold them to make profits. But these days few investors are selling because they have no other place to make investments, he said, which is causing the rates to fall even more rapidly.

Prospects that the government will lower call rates amid signs of economic downturn are also putting downward pressure on interest rates.

Meanwhile, Korea Investment Trust Management & Securities Co. said in a report that interest rates on three-year national treasury bonds would dip as low as 5.91 percent if restructuring is further delayed.