S.Korea cautious over short-term volatility after Fed's tapering

South Korea's economic and finance policymakers on Thursday voiced concerns over short-term volatility in the local financial market after the U.S. Federal Reserve decided to reduce its monetary stimulus program modestly.

"The Fed's decision came from the recent U.S. economic recovery and easing uncertainties over the fiscal deal, but it can expand volatility in the short term by accelerating capital flow in local financial and foreign exchange markets," Finance Minister Hyun Oh- seok said at a meeting with economy-related ministers.

The U.S. central bank decided overnight to cut back its pace of bond purchases by 10 billion U.S. dollars to 75 billion dollars a month starting January.

South Korean shares jumped more than 1 percent as the Fed's decision was already priced in and was interpreted as easing uncertainties over the Fed's future monetary policy.

Hyun said that the issue of the U.S. stimulus reduction was already priced in the market, noting that given solid economic fundamental of South Korea, the Fed's decision will have limited impact on the South Korean economy.

A senior official at the Financial Services Commission (FSC), the financial regulator, said that volatility in the global financial market can increase in the short term.

The official, however, noted that it will have a limited impact on the local financial market, saying that the Fed's decision can be viewed as easing uncertainties.