The International Monetary Fund building on Pennsylvania Avenue in Washington, D.C. (Photo courtesy AgnosticPreachersKid/Wikimedia Commons)
Korea has been picked as one of the countries along with Australia and Canada to deal best with the impact from the Fed’s exit strategy from quantitative easing.
The International Monetary Fund (IMF) published a report on October 7 (local time), titled “Global Impact and Challenges of Unconventional Monetary Policy.” The report details three countries that are likely to receive little impact from the US Fed’s exit strategy that will be in progress in the form of reducing the bond purchase from US$85 billion a month. Unconventional Monetary Policy (UMP) can be defined as a series of economic stimulus measures, such as a central bank’s market intervention, to get out of a recession and cope with a low-interest trend.
At this time, the IMF analyzed various countries’ exposure and resilience to determine the impact of the exit strategy on economies not subject to the UMP. Exposure has to do with market volatility and capital outflow, and resilience is about the capability of enduring such factors.
Korea achieved a high score on the exposure side. Specifically, the inflow of the US dollar into Korea stood at US$44 billion in the first quarter of this year, when the bond purchase by the Fed increased to US$85 billion, to remain below average since 2000. This means that the Fed’s expansionary policy has little effect on capital flow into and out of Korea.