South Korea is working on a contingency plan for Greece's exit from the eurozone that could increase financial volatility, a ranking official said Monday, as Seoul stocks went into a tailspin on news of a Greek vote against bailout terms.
More than 60 percent of Greek voters rejected creditors' demand for tough austerity measures in exchange for a bailout Sunday, triggering concerns over a "Grexit" from the eurozone and making investors jittery, Yonhap News Agency reported.
"We are working on a contingency plan as the likelihood of a Grexit has been bolstered, which would have a considerable impact on stock and foreign exchange markets," said Choi Hee-nam, deputy minister of international affairs at the finance ministry.
Mounting concerns over a Grexit battered the South Korean stock market on Monday. The benchmark Korea Composite Stock Price Index (KOSPI) plunged 2.4 percent to 2,053.93, the biggest daily fall in almost three years.
The local foreign exchange market, however, ended relatively unscathed, with the Korean won closing at 1,126.5 won, down 3.5 won from the previous close.
Finance Minister Choi Kyung-hwan said the ministry is closely monitoring the situation as it can have a short-term impact on the local foreign exchange and financial market and vowed to "prepare to take measures, if necessary."
Choi, however, added that the local stock market is seen to be in a relatively stable condition compared with other global markets.
In South Korea's case, its limited exposure to Greece, together with its financial soundness, make it less vulnerable to the Greek crisis.