The financial authorities of South Korea announced on Jan. 8 that the Financial Services Commission and the Financial Supervisory Service are running a market monitoring team with regard to financial uncertainties related to the conflict between the United States and Iran.
According to the financial authorities, the conflict is unlikely to develop into an all-out war. Still, the monitoring team is going to implement a contingency plan once it is determined that the volatility of the financial market rises more than expected.
South Korean financial companies’ foreign exchange exposure related to the issue is estimated at US$4 million or so. They have not increased the exposure since international sanctions against Iran, which means the South Korean financial market is unlikely to be directly affected by the Iran risks.
Still, exposure to indirect risks will be inevitable if the issue begins to cover the entire Middle East or leads to instability on the part of emerging economies. The South Korean government is keeping a close eye on the safety of South Korean ships in the Hormuz Strait area and the possibility of a rapid increase in oil prices, too.
The Bank of Korea also announced that it would keep monitoring the domestic financial and forex markets with regard to the possibility of more volatility.