Following the downgrade of U.S. credit rating from the top rating of Aaa to Aa1, South Korea’s Ministry of Economy and Finance held a financial market review meeting on Monday to discuss response measures to potential market shocks.
The meeting, presided over by Assistant Secretary Yoon Indae, was attended by representatives from the Bank of Korea, Financial Services Commission, Financial Supervisory Service, and the Korea Center for International Finance to assess the market implications from Moody’s downgrade of the U.S. credit rating.
On May 16, Moody’s lowered the U.S. credit rating by one level from Aaa to Aa1.
With this, the United States has now lost its top rating from all three major global credit rating agencies, following similar actions by S&P in 2011 and Fitch in 2023.
Attendees evaluated that the downgrade was somewhat expected, considering that Moody’s had previously maintained a negative outlook on the U.S. rating. They generally agreed that the market impact would likely be limited.
However, they acknowledged that this downgrade, combined with existing uncertainties such as ongoing tariff negotiations with major countries and the U.S. economic situation, could potentially increase short-term volatility in financial and foreign exchange markets. In light of this, the relevant F4 institutions decided to closely monitor trends in domestic and international financial and foreign exchange markets based on a close coordination system.
