The Bank of Korea cut rates to a record low of 1.75 percent this month, and Koreans are looking for higher returns overseas.

A general view of the Seoul city skyline at dusk (photo:AFP)

South Koreans have been scrambling to put their money in funds offering the highest interest rates, and to do so, they are looking not just at home but abroad too, after The Bank of Korea cut rates to a historic low.

“Japan first began investing in foreign assets 20 years ago when it entered the lowest interest rate era, and now more than half of its total financial assets are being invested overseas. So looking at this, I think our country will also begin investing overseas as we are entering the low-interest era,” said Kim Sung-joon, portfolio manager at Samsung Asset Management.

This month, the central bank cut rates by 25 basis points to a record low of 1.75 percent. Several banks took action right away and lowered their rates too.

Although this may be good news for Koreans who have bank loans, there are worries this could spark more borrowing. Koreans are already piling on household debt at the fastest level in a decade.

Right now, South Korea has one of the highest debt levels globally, surpassing the US before its housing crisis. The country’s top financial regulator designate said that remains the most pressing issue for the economy.