The top financial regulator on Sunday reaffirmed that the impact on Korea from the U.S. Fed's tapering would be limited, but with a note of caution from past lessons that global investors can change their course on a whim.

The U.S. Federal Reserve announced last week another $10 billion reduction in monthly bond purchases as it steps back from quantitative easing as announced in December. The South Korean market has been closed since Thursday for the Lunar New Year holidays and reopens on Monday.

"The cutback in quantitative easing was an expected event to a certain degree," Shin Je-yoon, chairman of the Financial Services Commission, said at a meeting that reviewed financial market conditions. "Therefore, the short-term market impact won't be strong."

But he conditioned his view, adding, "However, as the cutback is becoming actualized, it would be difficult to rule out the possibility of the fallout becoming bigger than anticipated."

The government sounded alarms last week, pointing to currency depreciations in emerging markets like Argentina and Turkey as investors exited in search of better paying interest rates.

"(South Korea) has shown its difference from the more susceptible emerging markets, but there is a chance that we will fall to second-hand contagion of a financial crisis from those countries," Shin said.  "We have to remember the lessons from the 1997 and 2008 (crises) that international investors can do an about-face on a whim."

A report out Sunday from the Korea Exim Bank said of the 10 emerging market countries that South Korea exports to, only two -- Uzbekistan and Russia -- are seen as having enough liquidity to ward off crisis.

The report said 41 percent of the country's exports in cash value were to these 10 nations last year, making South Korea potentially open to their market volatilities. (Yonhap News)