SEOUL, KOREA - A report said the June 19 announcement by the U.S. Federal Open Market Committee is not really an unfavorable factor for Korea's financial markets and the market must be more watchful about how the Chinese economy is doing.

Chung Young-taek, an analyst with KTB Investment & Securities, said on June 24, "Given that the Federal Open Market Committee meeting has substantially reduced uncertainties surrounding the timing of the end of the Fed's quantitative easing policy, the current market response is a bit excessive."

 

The Fed chairman Ben Bernanke said in a press conference on the 19th after a regular FOMC meeting the Fed's US$85-billion-a-month bond purchases could soon be reduced.

 

Chung said, "It must be noted that the U.S. economy is recovering faster than expected. As the quantitative easing volume rose, the size of the money deposited in the central bank rises too, which implies the overall liquidity won't be reduced even after the Fed exits from a loose monetary policy."

 

"What's more worrisome is the slowing of the Chinese economy. Although China is a country with a huge current account surplus and thus has a low possibility of being swayed by a few overseas speculative investors, the current financial market skittishness will continue due to the worry about the world's second-largest economy," he added.