By Cynthia J. Kim and news reports
Korea’s Finance Minister Bahk Jae-wan on Wednesday dismissed concerns over a possible cut in South Korea’s sovereign credit rating.
“There is little chance that our nation’s ratings will be lowered,” Yonhap news agency quoted Bahk as telling reporters after attending a financial forum in Seoul.
He made the remarks in response to a question about his views on the decision by Moody’s Investors Service to cut Japan’s debt rating by one notch from “Aa2” to “Aa3” citing its debt and deficits. Standard & Poor’s also lowered the U.S. government’s “AAA” rating earlier this month.
Before the downgrade of Japan, global rating companies’ lowered sovereign ratings of advanced nations, including the United States and some EU member countries.
Moody’s has kept South Korea’s credit rating at “A1,” the fifth-highest status, since upgrading it to the current level in April last year. Its delegation visited Korea in May to assess its latest economic and financial situation.
Bahk said that the downgrade on Japan had been expected, dismissing worries that the decision could have a significant impact on South Korean financial markets, according to Yonhap.
Meanwhile, during the conference on financial derivative products, Bahk emphasized the importance of global cooperation in controlling capital flows, which is regarded as a key element in financial stability at home and abroad.
South Korea has been pushing to keep a lid on excessive capital flows as it has painful memories of the abrupt exodus of foreign money from the country that caused the financial crisis in 1997-98.
“There are efforts being made to distinguish sound capital from speculative capital, while attempts are also being made to control capital flows,” he said.
“A new principle regarding capital flows should be set through harmonious policy coordination among individual nations.”
(cynthiak@heraldcorp.com)