The South Korean government says it will work to stabilize the financial market in case of increased volatility, indicating a possible intervention in the foreign exchange market.

At a meeting with officials on Tuesday, Deputy Finance Minister Bang Ki-sun said Seoul will take “swift and bold” steps to stabilize the market under a contingency plan in case of excessive market volatility.

The remarks came after the United States designated China as a currency manipulator Monday, a potentially severe escalation in the two countries’ ongoing trade war.

Bang's comments suggest that South Korea may attempt to stabilize or improve the exchange rate of the won to the U.S. dollar.

The won-to-dollar rate declined to its lowest mark in over three years on Monday, the same day China’s yuan sunk to an eleven-year low.

Bang, however, emphasized the need to calmly monitor the situation, citing the country's record levels of foreign exchange holdings and foreign credit, as well as positive credit ratings. 

Seoul also cited a global economic slowdown, sluggish demand for exports and its trade row with Japan as other factors behind the financial market downturn.