Stable Foundation
The Bank of Korea (BOK) said, “Even when the U.S. raises the base rate, the impact on the domestic market will be bearable.”
According to the current situation data submitted to the Strategy and Finance Committee in the provisional session of the National Assembly on April 21, the BOK said, “As Korea has maintained a current account surplus, its basic economic condition is sound. Also, the ability of foreign payments, including the expansion of foreign exchange reserves and the decrease of short-term foreign debts, is improving.”
The current account registered a surplus of US$6.44 billion (6.97 trillion won) in February, recording its 36th straight month after March 2012. The BOK believes that the figure this year will reach US$96 billion (103.92 trillion won).
The nation’s foreign exchange reserves at the end of March amounted to US$362.75 billion (392.68 trillion won). It has maintained the level of US$360 billion (389.7 trillion won) after it recorded US$360.91275 billion (390.69 trillion won) in May last year.
As of the end of last year, the balance of foreign debt totaled US$425.4 billion (460.5 trillion won). Among them, short-term debt with less than a year of maturity reached US$115.3 billion (124.81 trillion won), accounting for 27.1 percent of total foreign debt. Even though the share increased slightly from 26.4 percent at the end of 2013, the figure was only 31.7 percent compared to the foreign exchange reserves. It was the lowest after the financial crisis in 2008.
Regarding when the U.S. raises the base rate, the BOK said, “There is growing belief that it will be little later than expected, which is in June. This is largely due to the recent sluggish employment indicators and the consumer prices forecast downward in the U.S. However, the Federal Reserve can raise the base rate earlier than expected when the U.S. economy picks up quickly.”
It also added, “If it overlaps with the global risks like the Greece issue, the domestic economic conditions can be greatly influenced, including the outflow of foreign investment and the sudden rise of exchange rates, interest rates, and stock prices.”