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(LEAD) Financial authorities remain vigilant over escalating Mideast tensions

All News 14:30 January 08, 2020

(ATTN: CHANGES headline; REVISES paras 1-3 with updated info; UPDATES additional information in paras 4-5, last 3 paras)

SEOUL, Jan. 8 (Yonhap) -- South Korea's financial authorities plan to hold a series of emergency meetings Wednesday to gauge any impact stemming from the escalating military tensions in the Middle East on the local financial market.

The Bank of Korea and the Financial Services Commission are set to hold respective emergency meetings to assess any fallout from the latest geopolitical risks and local financial firms' credit exposures to Iran.

The meetings come as the local currency plunged by almost 1 percent against the U.S. dollar, while the local stock index plunged more than 1 percent.

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

The won was trading at 1,170.85 won against the U.S. dollar as of 2:15 p.m., down 4.45 won from the previous session's close.

The won's plunge came after Iran's state media confirmed a series of 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 Qassem Soleimani, 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.

Seoul's 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 financial watchdog later said the financial exposure of the country's financial institutions to Iran was tallied at about US$4 million.

The Financial Services Commission 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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