South Korea's finance ministry on Thursday said it will closely monitor market volatility, although the US Federal Reserve has hinted at no rate rise in 2023.

Vice Finance Minister Kim Yong-beom said market volatility may rise due to rising US bond yields, in spite of the US Fed's dovish stance.

The remarks by Kim were made at a meeting with senior officials at the Bank of Korea (BOK).

This week, the BOK cut the size of monetary stabilization bond (MSB) issuance in a move to help stabilize the local financial markets.

The BOK had planned to sell 2.2 trillion won ($1.9 billion) worth of MSBs with a two-year maturity this week, but it reduced the size to 1.1 trillion won.

The BOK had planned to sell 600 billion won worth of MSBs with a one-year maturity next week, but it will also cut the size to 300 billion won. (Yonhap)