South Korea's credit rating won't be affected by the impact from the unwinding of the U.S. monetary easing, as Washington's indication of an exit strategy means the world's No. 1 economy is improving, which will serve as a positive factor for Korea, a global credit appraiser said Thursday.
"Withdrawing the quantitative easing (QE) can mean the United States is shifting to growth, which can lead to more fresh orders for some ailing industries like shipbuilding and shipping in Korea.
It won't likely have an adverse effect (on Korea)," Tom Byrne, the senior vice president for Asia & Middle East at Moody's Investors Service Inc. said at a press briefing.
His comments came as the Seoul financial market was rattled after the U.S. Federal Reserve Chairman Ben Bernanke said Wednesday, local time, that its central bank may start tapering its $85 billion monthly bond purchase program later this year.
The benchmark KOSPI fell 1.75 percent to 1,855.13 as of 12:30 p.m., with the local currency tumbling 14 won to 1,144.85 won against the U.S. dollar at the same time.
In regards to a surge in bond yields, Byrne dismissed concerns on a hike in Korea's funding costs, noting that Korea has less necessity for debt refinancing compared with other countries as the government has maintained fiscal prudence at a sound level.
"The Korean government can afford its fiscal policy without negative consequences. Additional financing probably won't increase the cost of the government because the government is in such a good shape."
According to Moody's data, the index gauging a country's burden of borrowing costs to repay government debt stood at 0.7 for Korea, much lower than 6.2 for China and 17.1 for France.
South Korea is currently rated at "Aa3" by Moody's, the fourth-highest status, since the one-notch upgrade in August last year. (Yonhap News)
