Fitch Ratings upgraded the outlook for South Korea’s long-term foreign currency rating to “positive” from “stable,” and affirmed the A+ grade.
“Sovereign creditworthiness is strengthening as the sovereign and external balance sheets grow more resilient,” Andrew Colquhoun, head of Asia-Pacific Sovereigns at Fitch, said in an e-mailed statement today.
Asia’s fourth-largest economy has amassed foreign-exchange reserves of $311 billion and the nation’s “moderate public debt and long-standing fiscal prudence are key rating strengths,” Fitch said. South Korea’s economic growth slowed in the third quarter as companies cut spending on concern that the global slowdown and Europe’s debt crisis will curtail demand for Asian exports.
South Korea secured currency-swap agreements with other nations to shield it from any fallout from Europe’s fiscal woes and a faltering recovery in the U.S. and other developed economies. The nation agreed with China to almost double their won-yuan swap line to 64 trillion won ($57 billion) from 38 trillion won. A similar deal was signed with Japan on Oct. 19.
Moody’s Investors Service sent officials to Seoul in May to conduct an annual review of the nation’s sovereign rating, followed by Fitch in September and Standard and Poor’s last month.
Overseas shipments rose 9.3 percent in October from a year earlier, the slowest pace in two years, while consumer prices gained 3.9 percent from a year ago, moderating from September’s 4.3 percent gain to within the central bank’s target range of 2 percent to 4 percent.
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