South Korea will see limited effects from Argentina’s debt crisis, and the U.S. and Europe’s additional sanctions against Russia as Korean companies have relatively low financial exposure to the emerging markets, the Financial Supervisory Service said.

“Domestic banks have been stably renewing their short-term debt, and market interest rates have been facing low volatility,” an FSS official said.

The global financial markets have been in panic after the International Swaps and Derivatives Association declared that Argentina defaulted on its debt for the second time in 13 years.

The U.S. and EU’s sanctions against Russia to pressure it to abandon its support for separatists in Ukraine had adversely affected the global equity and bond markets.

Korean banks’ foreign currency exposure to Argentina is about $8 million, or 0.008 percent of the total.

The country’s foreign currency exposure to South American economies including Brazil reached $2.06 billion, or 2 percent of the total, while recording 1.3 percent for its exposure to Russia.

Its exposure to Ukraine is 0.3 percent, FSS data showed.

“Nevertheless, the FSS is increasing its monitoring of the financial market as Argentina and Russia are stoking concerns and affecting the global market, especially developing countries,” the officials said.

The regulator said that if market jitters persist, leading to a rise in the borrowing rate, the FSS plans to shift the country’s short-term loans to long-term debt.

By Suk Gee-hyun (monicasuk@heraldcorp.com)