South Korea said Wednesday it was closely watching for any fallout from the Russian risk sparked by the falling ruble and oil prices, while banks reported a safe level of market exposure.
   
Local banks and non-bank institutions' exposure to Russia stood at US$1.36 billion as of September, accounting for 1.3 percent of the country's total foreign lending of $108.4 billion, according to the Financial Supervisory Service (FSS).
   
Exposure, or market exposure, refers to the amount that an investor can lose from the risks of a particular investment.
   
The state-run Korea Exim Bank (KEB) has invested $958.3 million in Russia, including $520 million in Russia's government-owned Sberbank, followed by the Korea Development Bank (KDB) with $231.4 million and Woori Bank with $91.6 million, the FSS said.
  

Woori Bank and Korea Exchange Bank each run a branch in Russia, while KEB, KDB and Samsung Fire & Marine Insurance Co. operate local offices in the country.
   
Russia has seen financial freefalls in recent days, with its currency plunging 19 percent from international sanctions and nosediving oil prices.  It resorted to a 6.5 percentage point increase in its interest rate to ease the ruble's fall.
  
Both the FSS and the central bank said they are following the situation closely.
  
In a statement, the Bank of Korea (BOK) said it will look into possibilities the Russian risk may stoke volatility in the local foreign exchange and bond market, adding that it will cooperate with the government to stem fear impacting market participants.
   
"Usually, the impact is measured by the size of exposure. (Given the level of the Korean economy's exposure to Russia), the direct impact is unlikely to be large," BOK Gov. Lee Ju-yeol told reporters. "However, we are observing its ripple effect that comes through other routes." 
   
"South Korea will be free from the recent Russian crisis as our exposure to Russia is very low," said Kim Jin-soo, deputy governor at the FSS. "But we are closely watching the foreign currency market to check Russia's possible default as the ruble's steep downside move continues."
  

The country's exposure to 15 major emerging countries is 8 percent, or $8.1 billion, with $2.98 billion in Indonesia, $2.1 billion in India and $550 million in Turkey.
   
The emerging markets are struggling with massive foreign outflows as the collapse of the Russian currency spurred investors to seek refuge in safer assets. (Yonhap)