Korea expects limited impact

By Korea Herald
  • Published : Mar 20, 2014 - 21:05
  • Updated : Mar 20, 2014 - 21:08
Janet Yellen, chair of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, Wednesday. (Bloomberg)
The U.S. move to further scale back its monthly bond purchases is within an expected range and its impact on the Korean economy will be “limited,” Deputy Finance Minister Eun Sung-soo said Thursday.

“The additional tapering action has been expected, and such market indicators as U.S. stocks and interest rates remain within a range expected by the (Seoul) government,” Eun told reporters after holding a closed-door meeting to discuss responses to the Fed’s latest decision.

“We expect that its impact on the Korean economy will be limited.”

However, he said the government will step up its market monitoring, cautioning that the taper could amplify market jitters in the short term if combined with slowing economic growth in China and deepening instability in Ukraine.

“The announcement has been widely anticipated and there is a need to take into account that the Fed has taken the step because it is confident about the U.S. economy,” said Sohn Young-ki, a senior economic analyst at the Korea Chamber of Commerce and Industry.

He pointed out that unlike some other countries, South Korea maintains a large current account surplus, and has sound fiscal policies, manageable levels of external debt and sound economic fundamentals.