Outcome of Fed meeting to have limited impact on S. Korean market: official

Business

SEOUL– The U.S. Federal Reserve’s announcement of plans to accelerate the tapering of its asset purchases is expected to have a limited impact on the South Korean financial market as the outcome was in line with market expectations, a senior government official said Thursday.

After a two-day policy meeting, the Federal Reserve said Wednesday (U.S. time) it will double the pace of tapering its bond purchases and likely end them in March. The U.S. central bank signaled three rate hikes by the end of 2022 amid surging inflation.

U.S. stocks rallied as the Fed’s plan to accelerate the tapering largely met market expectations. The Dow Jones Industrial Average rose 1.08 percent, and the tech-heavy Nasdaq composite gained 2.15 percent.

South Korea’s stock prices and currency gained ground. The benchmark stock index rose 0.57 percent, or 17.02 points, to end at 3,006.41. The Korean currency closed at 1,183.90 won per the U.S. dollar, up 1.30 won from the previous session.

The outcome of the Fed’s meeting is expected to have a limited impact on the Korean market as it helped ease uncertainty about the U.S. monetary policy, according to First Vice Finance Minister Lee Eog-weon.

“But we cannot exclude the possibility that volatility in the financial market at home and abroad could increase if economic uncertainty heightens amid inflation risks and the spread of the omicron variant, coupled with China Evergrande Group’s debt problems,” he said.

The official said the government will closely monitor the global economic situations and monetary policy shifts by major economies, and the development of the COVID-19 pandemic.

“If needed, the government will take measures to stabilize the financial market in a preemptive and swift manner,” Lee added.

In a separate meeting held by the Bank of Korea, Deputy Gov. Park Jong-seok said that the FOMC’s decision appears to be within the range of expectations and its impact on the financial markets remains limited.

He still emphasized that the central bank will beef up its market monitoring by taking into consideration developments related to the pandemic, the state of major economies and inflation, saying that it will take market stabilization measures if necessary.

Source: Yonhap News Agency

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