BOK Activates Task Force to Monitor Markets Amid Middle East Crisis

The Bank of Korea has activated a task force to monitor financial markets related to the Middle East situation following U.S. and Israeli airstrikes on Iran. The central bank will monitor domestic and international financial and foreign exchange market volatility around the clock and respond immediately if necessary.

The BOK announced on March 3 that it held a "Middle East Situation Review Task Force Meeting" chaired by Governor Rhee Chang-yong. The meeting reviewed international financial market trends and assessed the impact on domestic financial markets and the economy following the U.S. and Israeli airstrikes on Iran on February 28.

The meeting is part of a series of continuous reviews that began with a video conference on February 28, the day of the U.S. airstrikes, and continued through a review of Asian and European financial markets at 9 p.m. on March 2. The BOK plans to analyze the possibility of a prolonged Middle East crisis and its potential impact on financial markets and the economy under various scenarios through the task force.

Major international financial markets saw increased volatility on the previous day due to heightened geopolitical risks. WTI crude oil prices rose 6%, natural gas surged 39.3%, and gold gained 0.8%. Treasury yields climbed, with U.S. 2-year and 10-year notes each rising 10 basis points, German 10-year bonds up 7 basis points, and U.K. 10-year gilts increasing 14 basis points. The S&P 500 was flat while the Nasdaq rose 0.4%, but European markets fell broadly, with the Stoxx index down 2.3% and the FTSE 100 declining 1.2%. The dollar index strengthened 1.0%, while the euro, yen, and pound all weakened.

Through the task force, the BOK will operate a 24-hour monitoring system in coordination with its overseas offices. The central bank will closely watch changes in domestic financial and foreign exchange markets and respond promptly when necessary. March 3 marks the first day domestic financial and foreign exchange markets open since the Middle East crisis began. The BOK plans to closely monitor market reactions and manage risks accordingly.

"Given that this Middle East situation may persist for a considerable period, we will continue to review scenario-based responses through the task force to stabilize financial markets and minimize economic impact," a BOK official said.