The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
  • Login
  • Register
  • Login
  • Register
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
  • 1

    INTERVIEWAhn Hyo-seop wanted to share dedicated love with 'A Time Called You'

  • 3

    Distraught roller skater apologizes for costly premature celebration

  • 5

    Korea makes last-ditch bid to host World Expo 2030 in Busan

  • 7

    Heavy traffic jams mostly eased on 5th day of holiday

  • 9

    Consumers to face higher prices for daily necessities after Chuseok

  • 11

    Samsung chief visits Middle East to explore new businesses

  • 13

    Korea picks up 2 medals in table tennis as gold drought continues

  • 15

    Ruling party vows to investigate China's alleged influence operations

  • 17

    Shin-Hanul No. 2 nuclear reactor begins testing for full operation next year

  • 19

    Internet-only banks outperform legacy lenders in labor productivity

  • 2

    Korea's Coast Guard apprehends 22 Chinese after illegal entry attempt

  • 4

    SHINee launches first Japan tour in 5 years

  • 6

    S. Korea wins 1st table tennis gold in 21 yrs

  • 8

    Public transit fares to increase in Seoul and Busan this week

  • 10

    LA-based photographer captures Koreatown unfazed by pandemic

  • 12

    No regrets for roller skaters after taking silver in relay

  • 14

    National Assembly speeds up efforts to outlaw dog meat consumption in Korea

  • 16

    'Dr. Cheon and Lost Talisman' tops Chuseok holiday box office

  • 18

    Genesis GV80 Coupe looks to compete with Mercedes-Benz, BMW

  • 20

    4 injured in rockfall at tourist attraction on eastern island of Ulleung

Close scrollclosebutton

Close for 24 hours

Open
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
Wed, October 4, 2023 | 22:46
Economy
Specter of capital flight looms large
Posted : 2018-09-27 15:12
Updated : 2018-09-27 21:20
Print PreviewPrint Preview
Font Size UpFont Size Up
Font Size DownFont Size Down
  • facebook
  • twitter
  • kakaolink
  • whatsapp
  • reddit
  • mailto
  • link
Bank of Korea Governor Lee Ju-yeol, surrounded by reporters, says on his way to his office in Seoul, Thursday morning that the central bank will need to stay on guard over possible capital outflows amid the widening rate gap between the U.S. and Korea. Yonhap
Bank of Korea Governor Lee Ju-yeol, surrounded by reporters, says on his way to his office in Seoul, Thursday morning that the central bank will need to stay on guard over possible capital outflows amid the widening rate gap between the U.S. and Korea. Yonhap

Fed's move puts BOK under pressure to hike rates

By Park Hyong-ki

Concern over capital flight is growing as the interest rate gap between Korea and the United States has increased to 0.75 percentage points, the widest in 11 years and two months.

This comes as the U.S. Federal Reserve raised its rate by 25 basis points to a range of 2 percent to 2.25 percent after a two-day meeting.

It is expected to further widen even if the Bank of Korea (BOK) raises its rate in November, as the Fed forecasts one more hike in December and three more in 2019, signaling the end of its "accommodative" policy.

Fed Chairman Jerome Powell said the U.S. economy is growing "strong with low unemployment and rising wages," backing the central bank's projection of four additional hikes.

The widening rate gap is further setting off alarm bells over the possibility of foreign capital exiting the market here, according to analysts.

BOK Governor Lee Ju-yeol told reporters on his way to his office that the U.S. rate hike was expected, and the central bank would increase its "vigilance and be on guard" against capital outflows.

"It is true that economic circumstances have made it more difficult for the central bank to decide the course of its monetary policy," Lee said.

The rising joblessness and growing inequality at home and the U.S.-China trade conflict are some of the internal and external factors that are making it tricky for the BOK, he noted.

Analysts say the gap could pose a risk of capital outflows amid a negative outlook and emerging market contagion from the crisis in Turkey.

"Concerns could grow should the market see signs of foreign funds that were expected to stay here over the medium to long term leave the market," said Sung Tae-yoon, an economist at Yonsei University.

"They could exit following short-term capital not only because of the growing rate gap but also because of the pessimistic outlook for corporate earnings and economic growth."

These are the two key outlook indices that help judge whether long-term foreign capital should stay or leave the market, Sung noted, adding they do "not look good" at the moment.

The OECD lowered its projection for Korea's growth recently to 2.7 percent from 3 percent mainly due to growing uncertainties over the U.S.-China trade dispute.

Kim Doo-un, an economist at KB Securities, agreed, saying long-term capital exiting the market at the first sign of economic trouble would pose a serious risk to the economy.

He added the U.S. may consider slowing down its pace of rate hikes next year as Powell said the trade war remains the biggest challenge and could hurt employment in the long run.

"The trade dispute could have the Fed readjust its rate pace. This would enable the BOK to buy more time to narrow the rate gap," Kim said.

KB Securities expects the BOK to revise down its 2018 growth projection in October, and raise its key base rate in November as inflation grows toward its 2 percent target.

Between May and October in 2000, the rate gap between the U.S. and Korea widened to a record 1.5 percentage points, according to the BOK. The Fed's increase to the 2 percent to 2.25 percent range was the eighth time it has raised its rate since late 2015.



Emailhyongki@koreatimes.co.kr Article ListMore articles by this reporter
 
wooribank
LG
Top 10 Stories
1Public transit fares to increase in Seoul and Busan this week Public transit fares to increase in Seoul and Busan this week
2Ruling party vows to investigate China's alleged influence operations Ruling party vows to investigate China's alleged influence operations
3Genesis GV80 Coupe looks to compete with Mercedes-Benz, BMW Genesis GV80 Coupe looks to compete with Mercedes-Benz, BMW
4Korean steelmakers on alert over initiation of EU carbon border tariff Korean steelmakers on alert over initiation of EU carbon border tariff
5Korean shipbuilders seek lead over Chinese rivals in selling LNG carriers to Qatar Korean shipbuilders seek lead over Chinese rivals in selling LNG carriers to Qatar
630 out of 74 major financial companies lack female board member 30 out of 74 major financial companies lack female board member
7Hyundai, Kia to extend earnings rally on strengthening dollar, solid sales Hyundai, Kia to extend earnings rally on strengthening dollar, solid sales
8Dong-A Socio Group’s honorary chairman passes away at 96Dong-A Socio Group’s honorary chairman passes away at 96
9Lawmakers want chairmen of financial firms held accountable over misconduct Lawmakers want chairmen of financial firms held accountable over misconduct
10Returning home from Chuseok holiday Returning home from Chuseok holiday
Top 5 Entertainment News
1TREASURE takes flak for excluding Dokdo from its Japan tour map TREASURE takes flak for excluding Dokdo from its Japan tour map
2Two artists' windows to light and serenity Two artists' windows to light and serenity
3Crime thriller, romance series set to roll out in October Crime thriller, romance series set to roll out in October
4Korean literature featured as animation works at Incheon Airport Korean literature featured as animation works at Incheon Airport
5[PHOTOS] Kep1er returns with 'Magic Hour' to mesmerize fans PHOTOSKep1er returns with 'Magic Hour' to mesmerize fans
DARKROOM
  • Turkey-Syria earthquake

    Turkey-Syria earthquake

  • Nepal plane crash

    Nepal plane crash

  • Brazil capital uprising

    Brazil capital uprising

  • Happy New Year 2023

    Happy New Year 2023

  • World Cup 2022 Final - Argentina vs France

    World Cup 2022 Final - Argentina vs France

CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Contact Us
  • Products & Services
  • Subscribe
  • E-paper
  • RSS Service
  • Content Sales
  • Site Map
  • Policy
  • Code of Ethics
  • Ombudsman
  • Privacy Statement
  • Terms of Service
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group