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(2nd LD) Credit-rating cuts for Greece, Portugal to have limited impacts on S. Korea: watchdog
SEOUL, April 28 (Yonhap) -- Credit-rating downgrades for Greece and Portugal will have a limited impact on South Korea's financial firms, as they have little exposure to the debt-ridden countries, the financial watchdog said Wednesday.
Citing fiscal deficit woes, global credit appraiser Standard & Poor's (S&P) downgraded its ratings for Greek government bonds by three notches to "BB plus," or "junk status." It also cut the rating for Portugal by two notches to "A minus."
The news renewed fears that sovereign debt risks in the euro-zone countries could amplify, heavily denting the global financial markets. Hit by the news, South Korea's key stock index fell 0.89 percent to 1,733.91 and the local currency closed at 1,118.70 won to the dollar, down 8.60 won from Tuesday's close.
But South Korea said the rating downgrade would have limited effects on South Korea's financial companies and markets as their exposure to the distressed countries is not high.
South Korea has US$400 million of loans and securities linked to the financially distressed euro-zone countries, which accounts for 0.76 percent out of Korea's total external exposures, according to the Financial Supervisory Service.
"Although the impact is expected to be limited on local financial firms, Korea plans to step up its monitoring of the market to brace for possible financial jitters stemming from the continuation of some southern European countries' fiscal problems," the watchdog said in a statement.
Analysts cast similar views, saying that the impact from the credit cuts on the Korean markets will be short-lived.
"Greece's fiscal difficulty is not a new issue. Greece has asked to tap a financial lifeline and credit rating agencies cut the rating somewhat belatedly," said Bae Sung-young, an analyst at Hyundai Securities Co. "The market took a breather as the key stock index sharply rose on strong earnings momentum."
Jeon Seung-ji, a currency analyst at Samsung Futures, said that it would be not easy for the Korean won to rise above the 1,100-won level to the dollar for the time being, as an intervention by foreign exchange authorities on Monday dampened demand for the dollar.
"But as foreign investors continue to buy stocks, there is a possibility that the local currency may climb above the 1,000 won level per the greenback in the second quarter," she added.
sooyeon@yna.co.kr
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