The overnight deal in Washington to put an end to the weeks-long government shutdown and avert an imminent default has removed the "largest" risk from the market, officials in South Korea said Thursday.
"The resolution to the partial shutdown and a looming default in Washington has removed the largest short-term risk from the market," a high-ranking finance ministry official said. "Our government can now breathe a sigh of relief."
On Wednesday (local time), the U.S. Senate struck a deal to end the government shutdown and an imminent default on its debt, prompted by the prolonged gridlock over health care programs.
Under the deal, which needs to be voted on, the government returns to normal until Jan. 15, and its borrowing limit will be temporarily hiked until Feb. 7.
The Korean stocks got off to a strong start, bolstered by the last-minute deal to avoid what could be a possible economic catastrophe. The benchmark KOSPI traded 0.48 percent higher as of 9:53 a.m.
Despite the breakthrough, the finance ministry official said that the Seoul government will still remain alert and closely monitor market situations as many other risk factors, including the U.S.'s tapering of quantitative easing, and economic situations in emerging countries could heighten volatility, they added.
Other officials and market experts expressed relief with the latest development in the U.S., but they also cautioned that the risks were not completely cleared as the deal is a temporary one, and a similar impasse could be repeated near the deadlines.