An electronic signboard in the dealing room of Hana Bank shows the Korean won dropping to 1,399.80 won during the trading session, Seoul, April 16. Yonhap

Korea's currency authorities warned of the won's sharp decline against the U.S. dollar Tuesday and that one-sided movement is not desirable for the Korean economy as the local currency traded at a 17-month low amid risk-averse sentiment sparked by geopolitical risks that stemmed from Iran's attacks against Israel.

The local currency ended at 1,394.5 won against the U.S. dollar, down 10.5 won from the previous session's close. The won dipped to as low as 1,400 won at one point.

The tumble came as Iran conducted the attack Saturday in retaliation for Israel's airstrike on Iran's diplomatic complex in Syria earlier this month. Israel had warned of retaliation.

The currency authorities vowed to take timely measures if needed to stabilize the market.

The won has already been under downward pressure, as the dollar has gained ground against major currencies as the much-coveted rate cuts by the Federal Reserve may come later than expected due to high inflation.

The currency market has been closely watched as the Seoul government worries that the won's continued slide could aggravate its efforts to keep a lid on fast-rising inflation here by making imports more expensive.

The Bank of Korea, the country's central bank, earlier said the won's slide is excessive compared with other currencies calling for the need to step up monitoring of market situations.

The central bank earlier this month said it is hard to predict a policy pivot during the second half of the year, as its current restrictive stance will be maintained for a sufficient period of time amid inflation uncertainties.

The bank froze its policy rate at 3.5 percent for the 10th consecutive time since February last year. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023. (Yonhap)