South Korean gov't to strengthen monitoring of economic fallout in wake of Iran's attack on Israel

Economy

Published: 14 Apr. 2024, 18:21 Updated: 14 Apr. 2024, 18:51

South Korean gov't to strengthen monitoring of economic fallout in wake of Iran's attack on Israel

President Yoon Suk Yeol presides over an emergency meeting at the Yongsan presidential office in central Seoul on the impact of heightened tensions in the Middle East on security and economic affairs following Iran's recent strikes against Israel. [PRESIDENTIAL OFFICE]

South Korea will strengthen monitoring of the currency exchange rate and the already strained oil supply as the impact on the economy of Middle East tensions is projected to grow following Iran’s drone and missile attacks on Israel on Saturday.

The presidential office pledged to closely track the movement of global oil prices and currency exchange rates and their impacts on supply chain networks and inflation, which remains stickily above the target rate.

South Korea strongly condemns Iran's attack on Israel

“Uncertainties on the global economy have grown from the geopolitical instability in the Middle East,” said the top office in a statement on Sunday. “We will cooperate closely with the international society to stabilize [the situation in] the Middle East.”

The government also strongly condemned Iran's large-scale attack on Israel on the same day.

An anti-missile system operates after Iran launched drones and missiles toward Israel, as seen from Ashkelon, Israel April 14, 2024. [REUTERS/YONHAP]

The president ordered a close analysis and systematic management of global oil prices, energy supply and demand as well as supply chain networks. He also ordered measures to ensure the safety of Korean nationals and corporations in Israel as well as vessels sailing in the nearby regions.

Finance Minister Choi Sang-mok, who presided over an emergency meeting with senior officials on the day, said the ministry will operate a joint emergency response team of related agencies to closely monitor the financial market inside and outside Korea around the clock.

Choi also stressed the need to examine the ministry’s contingency plan for a swift response to any emergency that can have a major toll on the Korean economy and the market.

The ministry added that it will monitor whether volatility in the financial and currency exchange markets expands excessively compared to the fundamentals of the country’s economy. The vigilance comes closely on the heels of the won's weakest showing since November 2022 on Friday, when it broke 1,370 against the greenback.

The growing regional conflict has raised concerns about oil prices, which the Bank of Korea noted as an increasing uncertainty it had considered in the latest rate-setting meeting on Friday.

The price of a barrel of Brent crude oil, the international benchmark, jumped more than 10 percent over the past month to around $90 per barrel.

Iran is the third largest oil producer in the Organization of the Petroleum Exporting Countries, with daily production estimated at around 3 million barrels.

“The global oil market is expected to be undersupplied in the second and third quarters of 2024, so a disruption in global supply could cause oil inventories to decline even more,” Rob Thummel, a senior portfolio manager at investment firm Tortoise, told MarketWatch.

Iran launched a wave of strikes toward Israel in retaliation for suspected Israeli strikes on an Iranian embassy complex in Syria earlier this month, which destroyed the consulate building in the capital Damascus and killed at least seven officials.

Of some 500 Korean nationals residing in Israel, no casualties have been reported in the aftermath of the Iranian attacks as of Sunday, according to Seoul’s Ministry of Foreign Affairs.

BY JIN MIN-JI [jin.minji@joongang.co.kr]