The recent conflict between the US, Israel, and Iran has significantly impacted the Korean stock and foreign exchange markets, which saw major fluctuations for two consecutive days. On the fourth, the KOSPI index plummeted by 12%, marking a historical decline surpassing that seen post-9/11. The rapid rise of the won-dollar exchange rate spiked to 1476 won, briefly exceeding 1500 won during overnight trading, a level not reached since the 2008 global financial crisis. This downturn, attributed to foreign investors withdrawing funds and domestic investors following suit, left many local investors reeling from recent losses. The article emphasizes that South Korea could be uniquely impacted by the ongoing war's ramifications in financial markets.

Despite the alarming drop in the stock indices and the floundering exchange rate, the article advises against overreacting to the financial market shocks. It notes that dollar liquidity remains stable and that credit default swap (CDS) premiums are at reasonable levels, indicating that the situation is not akin to past economic crises where dollar acquisition was challenging. Furthermore, it highlights that the recent bullish trend in stocks made a correction inevitable. However, preemptive measures are urgently needed to prevent the market's panic from spilling over into the real economy, with particular attention required to stabilize the foreign exchange market and to reassess multiple security networks, including currency swaps with major central banks.