Powers that be at the ready should tensions escalate

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Powers that be at the ready should tensions escalate

Korea’s financial authorities held a series of emergency meetings Wednesday to gauge the impact of escalating military tensions in the Middle East on the local financial market and discuss possible measures.

The Bank of Korea (BOK) said it will launch a 24-hour monitoring system to closely watch any changes in market conditions.

“The prevailing view is that the U.S.-Iran conflict will not lead to an all-out war, but there still remains the possibility of increased volatility in the local financial and foreign exchange markets,” BOK Deputy Gov. Yoon Myun-shik said in a statement released shortly after an emergency meeting in Seoul.

“The bank will take market stabilization measures if necessary, while closely cooperating and sharing its information on market conditions with the government,” the statement added.

The emergency meeting followed reports of Iranian missile attacks against U.S. military bases in Iraq in retaliation against the U.S. killing of a top Iranian general late last week.

Global stock markets fluctuated after the United States said it had killed Qassim Suleimani, the head of Iran’s elite Quds Force, in a drone attack.

Washington has warned of additional strikes against multiple Iranian targets in case of retaliation by the Middle Eastern country.

The local currency earlier dipped more than 10 won per dollar but recovered some ground after Seoul officials vowed swift steps in the case of increased volatility.

The won was trading at 1,171.65 won against the U.S. dollar as of 2:55 p.m., down 5.25 won from the previous session’s close.

The Kospi was down more than 1 percent.

Finance Minister Hong Nam-ki earlier said the government will intervene if necessary, but insisted it was too soon to determine such a need.

“In the case of any abnormal situation, the government will cope with the situation in line with contingency plans,” Hong told a meeting of economy-related ministers held earlier in the day.

“It is still too early to determine if the Iran situation has directly led to the increased volatility in the foreign exchange and stock markets,” he was quoted as saying.

The government later said the financial exposure of the country’s financial institutions to Iran was about $4 million.

The Financial Services Commission (FSC) said it is set to hold an emergency meeting to evaluate possible risks stemming from the tensions in the Middle East.

“It will closely monitor the market and take swift measures under its established contingency plans in case of a sharp increase in market volatility,” an FSC official said.

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