S Korea fin min downplays fund outflow risk on rate difference

SEOUL : South Korea's finance minister said on Thursday an inversion of the interest rate gap in favour of the United States as the Fed hikes rates would not by itself cause an outflow of funds, but that authorities were watching the situation.

"In the past, capital sometimes stayed here or even flew in more when there was an interest rate gap, depending on other conditions," Minister Choo Kyung-ho told reporters, referring to cases when U.S. interest rates were higher.

The comment came as an aggressive policy tightening by the Federal Reserve has lifted the mid-point of the U.S. policy rate target range to just 12.5 basis points below South Korea's, from more than 100 basis points in January this year.