Concerns are growing over the negative effects that the U.S.’ coming interest rate hike could have on the South Korean economy, while some local analysts have downplayed the possibility that the dollar would hold a stronger position against major currencies and investors would actively withdraw from Asia.

Some economists cited the U.S. Federal Open Market Committee’s tight monetary policy later this year and economic slowdowns in the U.S. and China as factors that could undermine the Korean economy. Among other factors were the global currency war involving Japan’s record-weak yen, Greece’s possible exit from the eurozone and budding woes in emerging economies.

Korea Institute of Finance economist Rim Jin was quoted by a news provider as saying that “should the U.S. benchmark rate climb, Korea’s rate could also rise. Under the scenario, Korea will face the situation that households have a bigger burden of payment of their financial debt.”

An economist from Hyundai Economic Research Institute said Korea may be wary of foreign investments’ massive outflow after the U.S. rate hike. “The raise may trigger a currency crisis of some emerging countries such as Venezuela and Ukraine,” he said.

Their worries are based upon the projection that global funds investing in emerging economies and Korea will relocate their stance to the U.S. market, seeking high returns on the possibly rising value of the greenback.

In contrast, Hana Daetoo Securities senior researcher Park Moon-hwan said the strong dollar would be a temporary trend. During his outlook presentation on a finance TV program, he said it would be difficult for the U.S. to continuously raise rates after an expected hike this year.

Saying that a hike for once has already been sufficiently reflected in the market, Park stressed the barometer for the dollar’s future value is the volume of new banknote circulation in the market according to the recovery pace.

Though the FOMC actively printed banknotes on a quantitative easing policy after the 2008-09 subprime mortgage crisis, a great portion of the new bills were allegedly held by the FOMC and banks amid sluggish cash demand from the market.

Meanwhile, the Finance Ministry of Korea is reportedly considering lowering its 2015 GDP growth target by about 0.5 percentage point from its earlier forecast of 3.8 percent, according to some government officials.

While the ministry plans to unveil its second-half policy directions in late June, it will likely take negative factors including sagging exports and external uncertainties into consideration.

By Kim Yon-se (kys@heraldcorp.com)