South Korea will keep up its monitoring on financial and economic conditions in order to swiftly respond to any eventualities amid deepening geopolitical risks from North Korea's continued war threats, a senior economic policymaker said Wednesday.

"The government will strengthen its monitoring on financial and economic developments, while keeping its efforts to stabilize sentiment among foreign credit appraisers and foreign investors,"

said Eun Sung-soon, the head of the finance ministry's international financial bureau. "In case market worries deteriorate, we will take market stabilization steps in a swift manner.'

The remarks are in response to increased volatility in the Korean financial markets, driven by heightened war threats from the North.

The country's currency and stock markets have been losing ground mostly due to massive foreign sell-off in recent sessions.

The credit default swap premium for South Korea also increased at a fast pace, reflecting growing concerns among investors about its sovereign debts.

Eun said that the recent outflow of foreign capital from stocks and bonds are "not serious enough" to hurt the overall macroeconomic conditions and added that the current CDS premium has not risen to a worrying point either.

He noted that the government thinks that the North's continued provocations would have a "limited" impact on the country's overall economic conditions, saying that there have been no such reported cases of exports being disrupted or foreign investment plans being canceled.

Still worrying that a prolonged instability could ratchet up geopolitical risks on the Korean Peninsula and have a "negative"

impact on the real economy, he said that the government will closely monitor markets and continue to strengthen overall economic fundamentals.

He also dismissed the concerns that growing North Korea risks could lead to downgrades of the country's credit ratings, citing the latest assessment of three credit appraisers -- Moody's, Standard and Poor's and Fitch -- which he said have recently confirmed there is little chance to adjust their credit stances.

As for some media reports that Korea has decided to delay its plan to issue dollar-denominated currency stabilization bonds due to deepening North Korea risks, Eun said that nothing has been decided with regard to the bond issuance and it depends solely on market circumstances.

"Whether and when we will issue the bonds and even how much we will sell such debts will be decided in consideration of the overall market situations," Eun said. "If situations in the market are not good enough, we also could scrap our plan to sell the bonds." (Yonhap News)