S. Korea closely monitoring impact of U.S. credit downgrade: finance ministry

August 2, 2023

South Korea is closely monitoring the aftermath of the U.S. credit rating downgrade, the finance ministry said Wednesday, noting the event is set to have only a limited impact on the market.

On Tuesday (U.S. time), Fitch Ratings downgraded the credit rating of the United States to AA+ from AAA, citing “repeated debt limit standoffs and last-minute resolutions.”

It marked the first downgrade of the world’s top economy since 2011 when S&P Global Ratings lowered the rating by a notch to AA+.

“So far, the market is expecting the impact (of Fitch’s downgrade) will not be as significant as the adjustment of the U.S. credit rating by S&P in 2011,” First Vice Finance Minister Bang Ki-sun said during a meeting.

“But as the market volatility at home and abroad may expand with increasing demand for safer assets, we plan to maintain close coordination among related bodies, and take measures to stabilize the market if necessary,” he added.

The benchmark Korea Composite Stock Price Index, meanwhile, fell 50.6 points, or 1.9 percent, to close at 2,616.47 on Wednesday.