The Bank of Korea(BOK) is cautioning that North Korea's latest nuclear test could cause greater financial volatility in the future, despite a limited response shown by the international market so far.
 
The central bank discussed reactions to North Korea's fifth nuclear test and its possible repercussions on the domestic financial and foreign exchange markets at an emergency meeting on Monday morning.
 
Based on reports from its offices in New York, London, Frankfurt and Beijing, the BOK said that there were significant swings in prices of some South Korea-related financial products, such as credit default swap premiums and interest rates of foreign exchange equalization bonds.
 
However, the central bank concluded that fluctuations mainly resulted from uncertain monetary directions in Europe and the U.S., not from North Korea's nuclear test.
 
It added that despite a lack of severe financial turmoil from major markets overseas, South Korea needs to prepare for the possibility that greater market volatility could be triggered if Pyongyang makes additional provocations and is slapped with more international sanctions.
 
The central bank plans to strengthen its monitoring of the international financial market and closely analyze the impacts of geopolitical risks posed by the North.