Fitch IBCA, the international rating agency, has restored the Republic of Korea's sovereign rating to investment grade.

Citing an "unprecedented recovery in external liquidity," the agency upgraded Korea's long-term foreign currency rating to BBB- from BB+ and short-term foreign currency rating to F3 from B.

"Even under the most cautious assumption, Korea's current account surplus is likely to remain around $30 billion in 1999 and demands on international capital markets should be modest despite a heavy repayment schedule," Fitch IBCA noted.

Rating agencies downgraded South Korea to below investment grade after financial turmoil last year forced local banks into rescheduling their foreign debts. The turmoil triggered heavy losses on derivatives contracts at J.P. Morgan & Co. and forced other U.S. banks to extend credits they would have preferred to terminate.

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