The impact of Dubai debt risks on domestic financial markets will be limited, but the government will monitor the situation on a daily basis to take action if needed, South Korea’s finance ministry said Monday.
“Korea’s borrowing from European banks may be affected by the Dubai incident, but any negative impact will be limited, given Korea’s foreign exchange reserves and favourable dollar conditions in the local market,” it said in a statement after a meeting of related ministries.
The Dubai debt news may hurt the global financial markets temporarily, but won’t likely develop into another global crisis, it said.
South Korean builders will likely continue to benefit from growing construction projects in the Middle East despite the Dubai incident, the ministry said.
Dubai World, the city-state’s largest corporate entity, last week asked creditors for a six-month standstill on debt repayments. The announcement has sent shock waves through the global markets.