SEOUL, KOREA - A study said the Korean economy has an ample ability to withstand the worst-case scenario of foreign investors' outflow from the stock market. In a report "U.S. Exit Strategy and Its Impact on Emerging Markets" published by LG Economic Research Institute on July 7, Lee Chang-sun, the institute's research fellow, said, "Korea has become resilient to external shocks following the 2008 global crisis."
"Even assuming the worst case, the short-term effect of money outflow would be US$273.7 billion. Given the foreign reserves of $326.4 billion as of the end of June, the Korean economy is capable of absorbing the shock," he added.
The estimated amount of foreign money outflow is based on the March short-term foreign debt plus a third of stocks and bonds held by foreign investors as of the end of May. He also said, "As the won is not an international currency, we have to allow for a certain amount of foreign portfolio investment to leave the country. The government must be able to continue its policy to stabilize the bond market through microeconomic measures if it finds it hard to raise the benchmark rate."
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