Seoul to keep monitoring financial markets after North's nuke test

By Koh Byung-joon
SEOUL, May 26 (Yonhap) -- North Korea's latest nuclear test had a "limited"
impact on South Korea's financial sector but the Seoul government will keep
bracing for possible negative influence by closely monitoring market
developments, financial and economic policymakers said Tuesday.
On Monday, Pyongyang announced that it successfully conducted a second nuclear
test to beef up its nuclear deterrent in defiance of stern opposition by the
international community. North Korea conducted its first nuke test in October
2006.
"Yesterday's nuclear test temporarily shocked the local financial markets but the
impact was limited," said a statement jointly issued by the Ministry of Strategy
and Finance, the Bank of Korea (BOK), and the Financial Services Commission.
"Depending on how things unfold, however, it could be recognized as a
geopolitical risk, which would negatively affect domestic financial markets... We
will continue to closely monitor market conditions and intensify cooperation
among related agencies to take preemptive and swift measures if necessary," it
added.
The reports on North Korea's nuke test initially made a big dent in South Korea's
financial markets, sending the nation's stock index plunging more than 6 percent
at one point and causing the local currency to lose significant ground against
the greenback.
Shares, however, recouped most of the losses thanks to massive bargain hunting by
foreign investors, with the benchmark KOSPI inching down 0.2 percent at the close
on Monday. The won also ended down a mere 1.6 won versus the dollar.
Task forces will be operated to monitor the impact of the North's nuclear test on
domestic and overseas financial markets as well as on the real economy, said the
statement, which was issued after an emergency meeting earlier in the day.
The task forces will be run at the finance ministry, the Financial Services
Commission and the Ministry of Knowledge Economy, it added.
"We will monitor market conditions on a daily basis through the task forces and
take measures if necessary," the statement said.
kokobj@yna.co.kr
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