Seoul: The United States' military involvement in the Middle East has heightened market uncertainties, the South Korean central bank said Monday, vowing to take "appropriate market stabilization measures" in a timely manner, if necessary. The assessment comes as U.S. President Donald Trump announced precision strikes on three key nuclear facilities in Iran over the weekend, exacerbating the crisis in the Middle East and sparking concerns about its impact on global markets.
According to Yonhap News Agency, the Bank of Korea (BOK) emphasized its commitment to maintaining vigilance and closely monitoring developments. "Given that U.S. military involvement has significantly heightened uncertainty in the Middle East, we will maintain a high level of vigilance and closely monitor developments in the situation and their impact on domestic and global financial and economic conditions through a 24-hour monitoring system," stated BOK Deputy Gov. Yoo Sang-dai during an emergency task force meeting.
Yoo further mentioned, "If market volatility becomes excessively amplified, appropriate market stabilization measures will be implemented in a timely manner." During the meeting, officials assessed that uncertainties surrounding the global economy and inflation could increase due to instability in global oil prices and that global risk aversion sentiment could be further heightened.
The local currency weakened markedly against the U.S. dollar on Monday, falling 18.7 won from the previous session to close at 1,384.3 won. Additionally, the Korea Composite Stock Price Index (KOSPI) fell 0.24 percent to finish at 3,014.47.
Park Hyung-jung, an economist at Woori Bank, noted, "The future direction of the financial markets will largely depend on the level of Iran's retaliation. Given the high uncertainty surrounding Iran's response, we should be prepared for the possibility of further deterioration in Middle East tensions and increased market volatility over the next one to two weeks."
Analysts warn that the worst-case scenario could involve Iran launching attacks on U.S. military bases in the Middle East or blocking the Strait of Hormuz, potentially causing global oil prices to surge to around $100 per barrel instantly.