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(LEAD) S. Korea to counter excessive herd behavior after N. Korean attack
SEOUL, Nov. 24 (Yonhap) -- South Korea will inject more liquidity into the market to counter excessive herd behavior following a North Korean artillery attack on an island in the West Sea, the government and central bank said Wednesday.

   In an emergency meeting of economic officials following the artillery barrage on Yeonpyeong Island near the sea demarcation line with North Korea on Tuesday, policymakers pledged they will tackle any problems that may arise in the financial and currency markets.

   "Timely action will be taken if excessive herd behavior is detected with the government, and the Bank of Korea set to cooperate on stabilizing the market," the finance ministry said in a statement after the meeting.

   If necessary, Seoul will inject more money into the market and make use of its large foreign reserves so there is an adequate amount of liquidity, and will take additional measures, it added.

   The ministry, however, said that despite concerns of fallouts from the attack, the South Korean economy is expected to regain stability.

   "Judging by past events such as North Korea's nuclear tests, naval clashes and the sinking of a South Korean warship, the repercussions caused by the shelling will likely be considered a temporary geopolitical risk factor," said Vice Finance Minister Yim Jong-yong, who chaired the meeting.

   He pointed out that South Korea has the ability to absorb external shocks and there is considerable faith in the economy as a whole.

   "The attack came when the global economy was facing difficulties, so there is a possibility of adverse effects on business investments that can require close attention," he said.

   The government set up a 24-hour emergency monitoring and response team Tuesday to check both domestic and overseas developments.

   The meeting was attended by senior officials from the Ministry of Strategy and Finance, the Ministry of Knowledge Economy, the Financial Services Commission, the Bank of Korea and the Korea Center for International Finance.

   yonngong@yna.co.kr
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