South Korea will closely monitor the financial market as a flare-up in COVID-19 cases and the spread of more contagious virus variants could increase market volatility, a senior government official said Tuesday.

First Vice Finance Minister Lee Eog-weon said the government will beef up the monitoring of financial risks as the global economic recovery could be slowed due to the spread of the more transmissible delta variant, first identified in India.

"As (economic) uncertainty, such as COVID-19 variants lingers, we cannot rule out the possibility that market fluctuations could increase," Lee said at a meeting on macroeconomics and financial markets.

"The government will closely watch the situation with high vigilance," he added.

South Korea's stock and currency markets showed high volatility in recent sessions on concerns about a virus resurgence.

The country's key stock index slid for the third straight day Friday over virus woes before it rebounded Monday.

The Korean currency ended at 1,149.1 won against the US dollar Friday, down 4.1 won from the previous session's close and the weakest close in nearly nine months.

South Korea is grappling with spiking virus cases as the country's new daily virus cases topped 1,000 for the sixth consecutive day Monday. The country set a record high for daily cases Saturday with 1,378.

Health authorities on Monday began implementing the Level 4 social distancing measures, the highest level in its four-tier scheme, in the greater capital area for two weeks in a bid to curb the fourth wave of the pandemic. (Yonhap)