The South Korean economy faces heightened external economic risks amid soaring energy costs, global inflation risks, and geopolitical tensions between Russia and Ukraine, Finance Minister Hong Nam-ki said Friday.

Hong made the remark in a meeting with the central bank chief and the top financial regulators to discuss policy coordination, market volatility and financial imbalances, and ways to stabilize consumer inflation.

The minister said the Korean economy has extended its recovery momentum, but it faces increased economic uncertainty at home and abroad, raising the need to implement fiscal, monetary and financial policies in a concerted manner.

"Volatility could increase related to interest rates, foreign exchanges and cross-border capital flows. This could negatively affect household debt, the self-employed and the non-banking sector," Hong said.

He said the economic policymakers will focus their discussions on measures to stabilize the bond market, to ease the accumulated financial imbalances and tame growing inflationary pressure at the meeting.

Bank of Korea (BOK) Gov. Lee Ju-yeol; Doh Kyu-sang, vice chairman of the Financial Services Commission (FSC); and Jeong Eun-bo, chief of the Financial Supervisory Service, attended the meeting. Doh joined the meeting instead of FSC chief Koh Seung-beom as Koh tested positive for COVID-19.

It was the first time since September last year for the four heads of the fiscal, monetary and financial authorities to hold a meeting to discuss macroeconomic issues.

The country's financial market has seen volatility increase due to the prospects that the Federal Reserve will likely hike the key rate in March.

The Korean currency has sharply fallen against the U.S. dollar in recent months, with the won dropping to a 19-month low of 1,206.40 per the greenback on Feb. 3.

Yields of three-year government bonds rose 6.6 basis points to 2.303 percent Tuesday, the highest in nearly four years. The BOK bought Treasury bonds worth 2 trillion won to stabilize the bond market.

Higher oil prices and the won's weakness have boosted the country's import bills.

Oil prices have spiked on tight supplies and escalating geopolitical tensions between Russia and Ukraine.

Dubai crude, South Korea's benchmark, soared to $90.91 per barrel Monday, up from $77.12 at the end of last year. South Korea depends mainly on imports for its energy needs. (Yonhap)