Major financial indices recorded limited volatility Monday, despite growing worries over negative effects on the stock and foreign exchange markets from geopolitical tensions on the Korean Peninsula.

The movements of stock prices and foreign exchange rates Monday drew wide interest as South Korean and U.S. troops launched their annual joint drills earlier in the day.

Though stocks fell below the 1,990 mark and the U.S. dollar was traded above 1,100 won during the morning trading session, the two major indices closed with a stable recovery.

The dollar, which saw its highest gain on the Korean currency in four months during the trading session, closed at 1,094.8 won, up 4.5 won from a session before.

Samsung Futures research analyst Jeon Seung-ji said the globally strong position of the U.S. dollar and risks from North Korea acted as factors, which caused the won to lose ground.

“But export-oriented firms’ mass selling of the dollar will weaken the momentum for the greenback’s further gaining,” she predicted in a report.

The Korea Composite Stock Price Index also gained to close at 2,003.35, down 0.13 percent (or 2.66 points) from a trading session earlier.

While foreigners net sold local shares worth 220.8 billion won ($202.5 million), institutional investors net purchased totaled 391.6 billion won.

Financial policymakers have bolstered their monitoring of a variety of indices at home and abroad.

With the latest U.N. resolution tougher than before, concerns are being raised that North Korea could engage in other provocative acts.

“Should more provocations result in raising geopolitical risks further, we cannot rule out the possibility that they could have a ripple effect on our financial markets and real economy,” said Vice Finance Minister Shin Je-yoon, who has been nominated as the next chairman of the Financial Services Commission.

Shin said that the government would take any necessary measures in accordance with its contingency plans to stabilize the market if market anxiety deepened due to the North’s provocations.

The latest U.N. resolution bans all countries from providing public financial support for trade deals, such as granting export credits, guarantees or insurance, if the assistance could contribute to the North’s nuclear or missile programs.

By Kim Yon-se (kys@heraldcorp.com)