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‘Korea Expected to be Less Vulnerable to After Effects of Interest Rate Hike by Fed’
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‘Korea Expected to be Less Vulnerable to After Effects of Interest Rate Hike by Fed’
  • By Jung Suk-yee
  • December 14, 2015, 02:00
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The Korea Chamber of Commerce & Industry said on Dec. 13 that Korea is predicted to be less affected by an interest rate hike by the Fed, whereas Turkey, South Africa, Malaysia and Argentina are likely to be particularly vulnerable to the consequences.

“According to the International Monetary Fund and the Federal Reserve System, Korea is the third-safest economy among the 11 emerging economies they recently analyzed,” it explained, continuing, “Although short-term funds of US$270 billion are estimated to flow out of Korea after the interest rate hike, this can be dealt with by means of US$374.7 billion in foreign exchange reserves and US$28.9 billion in the three-month trade surplus.”

It added that Korea showed the highest level of stability among the 11 countries when it comes to CDS premiums, which stood at 0.54 percent this month.

“Since 1997, Korea’s foreign exchange reserves have increased by more than 14-fold and its emergency response capabilities have shown a significant improvement as well,” it remarked, adding, “When the Fed mentioned the possibility of tapering two years ago, foreign investors withdrew their money mainly from Thailand, Indonesia and the like instead of Korea.”