The situation in the Middle East drags down the South Korean won below the 1500 mark for the first time since 2009! The Bank of Korea and the Ministry of Finance hold emergency meetings to be on guard.

During the financial market volatility triggered by the situation in the Middle East, the overnight USD/KRW exchange rate briefly rose to close to 1506 levels, breaking through the 1500 mark for the first time since the outbreak of the global financial crisis in March 2009. Analysts say that the sharp decline in the Korean won is caused by the rise of the US dollar, as people are concerned that actions by the US and Israel may escalate into a broader regional war, with a longer duration than expected. Regarding the decline of the Korean won, the Governor of the Bank of Korea, Lee Chang-ryong, warned to guard against excessive market fluctuations. It is reported that Lee Chang-ryong postponed his trip to Bangkok to attend an International Monetary Fund (IMF) event and instead held an emergency meeting in Seoul with officials from the central bank and the finance ministry to assess the latest trends in the Korean won, government bond yields, and other financial market indicators. As of the time of writing, the USD/KRW exchange rate has fallen back to around 1472. Meanwhile, the Korean stock market has seen a significant drop for the second consecutive day, with the Korea Composite Stock Price Index (KOSPI) falling by more than 12% in two days, wiping out all gains made in February. South Korean Finance Minister Hong Nam-ki said about the Korean won: "We are maintaining a high level of vigilance and conducting daily assessments and monitoring. The current situation is largely driven by external shocks, and if these external factors stabilize rapidly, the situation could change." The Bank of Korea stated in a declaration that it has agreed to closely monitor whether the exchange rate and bond yields are deviating excessively from the fundamentals of the South Korean economy, including the current account balance. The central bank said that the volatility of key financial market pricing variables, including exchange rates, interest rates, and stock prices, could remain high for some time, depending on the developments in the Middle East situation. Officials unanimously agreed to coordinate with the government if necessary and take timely measures to prevent market sentiment from becoming overly one-sided. As the conflict in the Middle East shakes global markets and intensifies concerns about rising energy prices in South Korea - which is almost entirely dependent on imported oil and gas - the Korean won has been under tremendous pressure. Since July last year, the Bank of Korea has kept its benchmark interest rate unchanged at six consecutive meetings and has repeatedly warned that geopolitical tensions could exacerbate financial market volatility. In recent months, the Korean won has experienced significant fluctuations, and the escalation of the conflict in the Middle East has further added downward pressure on the Korean won, as the market worries that rising oil prices may drag down South Korea's trade balance.