By Cho Jin-seo
Heads of economy-related ministries held emergency meetings on Tuesday evening as financial markets showed signs of turbulence following an artillery exchange between the two Koreas.
The KOSPI was unaffected Tuesday, as the news of the attack on Yeonpyeong Island arrived in the closing minutes of trading, at around 2:58 p.m. But ministers and regulators expressed concern that they may see money fly out of Korea as soon as trading begins Wednesday.
The ministers of strategy and finance, knowledge economy and the chairman of the Financial Supervisory Commission (FSC) met at the Gwacheon government complex at 7 p.m., about four hours after the Koreas exchanged fire, to be briefed on reactions on international financial markets.
“Judging from similar experiences in the past, it seems there may be some short-term volatility but that will soon be stabilized,” said Finance Minister Yoon Jeung-hyun said in an opening remark.
The ministries, Bank of Korea and the FSC will launch a joint monitoring team today to cope with possible market disorder, Yoon said.
When the news hit the market, the won-dollar exchange rate soared by as much as 3.5 percent in offshore trading. But the shock soon subsided and the Korean won regained most of the fall later.
Market analysts in Korea shared the same optimism as Yoon, saying the incident was no more than a minor scuffle caused by the North Korean military. In March, for example, when an alleged North Korean torpedo sank a Navy frigate, the stock and the foreign exchange market suffered from a brief and almost benign fluctuation.
“Though it is difficult to make a clear decision, this seems like a short-term geopolitical risk, rather than an issue of (economic) fundamentals,” said Park Tae-keun, an analyst at Hanwha Securities in a report.
Still, stock market operators were cautious on the possibility of a crash. The Korea Exchange, the main bourse operator, said it was launching a taskforce to monitor any unusual movements on domestic and foreign financial markets.