SEOUL-- South Korea's external debt hit an all-time high in the second quarter of this year, driven by an increase in short-term liabilities amid growing financial market volatility and economic uncertainty, central bank data showed Thursday.

The country's external liabilities came to US$662 billion as of end-June, up $7.9 billion from three months earlier, according to the preliminary data from the Bank of Korea (BOK).

The amount was the largest ever since relevant data began to be compiled in late 1994.

The rise was attributed to the government's unloading of dollars to defend the local currency and a decline in the converted value of non-dollar assets amid the strong greenback.

The BOK also cited high raw material prices that increased spending for imports and high demand for dollars from local companies seeking overseas investments.

In particular, the country's short-term debt that matures in a year grew $8.9 billion on-quarter to $183.8 billion as of end-June, the data showed.

The ratio of short-term debt to foreign reserves rose to 41.9 percent as of end-June, up 3.7 percentage points from three months earlier.

It also marked the highest since the second quarter of 2012, when the corresponding figure jumped to 45.6 percent. A higher ratio means weaker debt-serving capability.

The ratio of short-term debt to total external liabilities also increased 1 percentage point on-quarter to 27.8 percent, the data showed.

A BOK official said despite the debt ratio's increase, the country's capability of paying back remains in good shape and dismissed concerns that the country's sovereign credit ratings might be downgraded.

The official added that the ratio will not likely exceed 50 percent this year, citing the fact that foreign reserves have stopped their decline since July.

South Korea's foreign reserves came to $438.61 billion as of end-July, up $330 million from the previous month. It was the first increase after five consecutive months of shrinkage.

Source: Yonhap News Agency