Financial uncertainty likely to drag on: official

SEOUL, Aug. 10 (Yonhap) -- The ongoing financial turmoil triggered by concerns over the U.S. economy and Europe's fiscal crisis is expected to last for a long time, a high-ranking official said Wednesday.
"The crisis is unlikely to be solved in the short term and expected to continue to weigh down on the global economy and financial markets because it stems from a structural problem of the real sector," Shin Je-yoon, vice chairman of the Financial Services Commission, told an emergency meeting of financial regulators.
Shin's remarks come after the local financial market took a beating sparked by the first-ever U.S. credit rating downgrade and the persistent debt crisis in Europe. The main KOSPI index plunged more than 17 percent over the last six sessions as panic prompted retail investors to dump shares.
Shin said the impact of external economic uncertainties on South Korea is inevitable due to the local economy's high overseas exposure, but added the impact is likely to be limited.
"South Korea's ability to cope with crises has substantially improved after the country went through two financial crises," Shin said, citing the country's ample foreign exchange reserve and a decline in short-term foreign borrowing.
South Korea, Asia's fourth-largest economy, has successfully overcome the 1997-98 foreign exchange crisis and the 2008 global financial turmoil sparked by the insolvency of Lehman Brothers.
The country's foreign reserves reached a fresh high of US$311.03 billion as of the end of July, up $6.55 billion from June.
Shin, meanwhile, said the Fed's move to keep the U.S. benchmark short-term rate interest near zero is "positive" news. The Federal Open Market Committee said on Tuesday (local time) it plans to sustain the current low interest rate to mid-2013.