Daijiworld Media Network - Seoul

Seoul, Apr 7: The Bank of Korea (BOK) on Monday issued a stern warning that South Korean financial markets could face prolonged volatility in response to sweeping tariff measures introduced by the Donald Trump administration in the United States.

In an emergency task force meeting to assess market conditions, BOK Deputy Governor Ryoo Sang-dai emphasized the need for heightened vigilance and swift market stabilisation steps, citing uncertainty over the future trajectory of US trade policies.

“Uncertainties surrounding the US' tariff stance remain high and could persist longer than expected. A 24-hour surveillance of financial and foreign exchange markets is essential, with immediate intervention if needed,” Ryoo said, according to Yonhap news agency.

The warning came as Trump’s latest tariff declaration rattled markets globally. His administration has pledged to impose a 25 percent duty on South Korean goods effective Wednesday (US time), and a 10 percent ‘baseline’ tariff on all foreign imports was enforced from Saturday.

The tariff announcements sent the Korea Composite Stock Price Index (KOSPI) tumbling by over 4 percent on Monday morning, while the South Korean won fell sharply, nearing 1,470 against the US dollar a level not seen since 2009.

Officials described the new tariffs as “strong” and expressed fears that they could trigger a broader global trade dispute.

South Korea’s economy, already under pressure, could feel an intensified impact. A separate report from the state-run Korea Development Institute (KDI) echoed the central bank's concern, citing mounting downside risks due to weak domestic demand, sluggish production, and growing trade uncertainty.

"Recently, the Korean economy is facing mounting downward pressure as weakened growth in domestic and external demand has weighed on production and US tariff hikes have exacerbated global trade uncertainties," the KDI said in its monthly outlook.

This marks the fourth consecutive month that the think tank has highlighted economic vulnerability, especially pointing to sluggish construction investment and tepid consumer spending, despite steady performance in equipment investment.

As Seoul braces for further impact, both government and financial institutions have vowed close coordination to defend market stability and support economic resilience.