BOK Deputy Governor: "Iran Attack Limited in Scale, but Volatility Expansion Cannot Be Ruled Out"

On the morning of the 2nd, the Bank of Korea assessed that although Iran's level of attack on Israel was limited, it is difficult to rule out the possibility of increased volatility in domestic and international financial markets due to global risk aversion sentiment.

Yoo Sang-dae, Deputy Governor of the Bank of Korea, is speaking at the joint press briefing on the plan to promote the CBDC usability test held on the afternoon of the 4th at the Bank of Korea Integrated Annex in Jung-gu, Seoul. Photo by Joint Press Corps

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On the same morning, Yoo Sang-dae, the Deputy Governor of the Bank of Korea, held a 'Market Situation Review Meeting' related to the Middle East situation, checking the international financial market conditions following Iran's attack on Israel and the potential impact on domestic foreign exchange and financial markets, and made these remarks.

Earlier, on the evening of the 1st (local time), Iran launched a large-scale ballistic missile attack targeting Israel, and Israel warned of retaliatory strikes against Iran, escalating the risk of a war originating from the Middle East.

Due to heightened geopolitical tensions, global preference for safe-haven assets has strengthened. Compared to the previous day, the US 10-year Treasury yield fell by 5 basis points, German government bond yields dropped by 9 basis points, and UK government bond yields decreased by 6 basis points, while the S&P 500 index declined by 0.9%. Conversely, the US Dollar Index (DXY) rose by 0.4%, and international crude oil prices (WTI futures) increased by 3.8%.

Deputy Governor Yoo stated, "Iran's level of attack is assessed to be limited," but added, "depending on Israel's future response and its intensity, it is difficult to exclude the possibility that global risk aversion sentiment will strengthen, leading to increased volatility in domestic and international financial markets."

He continued, "With heightened vigilance, we plan to closely monitor the progress of the Middle East situation and its various ripple effects on domestic and international finance and economy through a 24-hour monitoring system linked with overseas offices."

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