SEOUL, Jan. 13 (Xinhua) -- South Korea's financial markets on Tuesday jittered as the Chinese central bank raised the deposit reserve requirement ratio by 0.5 percentage point, with the stock markets and foreign exchange rate plunging from the last close.

    The benchmark Korea Composite Stock Price Index (KOSPI) and the Korean Securities Dealers Automated Quotations (KOSDAQ) jointly marked a plunge of 27.23 points and 3.65 points, respectively, from the last close.

    The report from China also affected the foreign exchange market, with the local currency also sliding against the U.S. dollar by 1.9 won.

    The move triggered foreign and institutional sell-offs as it came without any clear prior signs, local media said.

    "Investors anticipated that China would tighten its monetary policy at some point, but it came faster than they had expected," Hwang Keum-dan, an analyst at Samsung Securities, told South Korea's Yonhap News Agency.

    "Its further impact on the Seoul bourse will depend on the pace and the extent of additional steps that China takes," he added.

    While local analysts mostly remain calm, saying stock prices are already reflecting the risk as the move was expected, they are still worried in that it may mark a starting point of a global monetary tightening policy, local Maeil Business Newspaper said.

    "Investors are most concerned that the move, together with a hike in raw material prices and the base effect, may lead into acceleration in inflation," a local analyst told the media.

    Earlier in the day, the People's Bank of China (PBOC), the central bank, announced to raise the deposit reserve requirement ratio by 0.5 percentage points from Jan. 18 this year.

    This is the first time that the PBOC adjusted the ratio of deposit that lenders are required to set aside since the end of 2008 and the first increase for the ratio since June of 2008.

    The PBOC has cut the bank reserve requirement ratio for four times in the second half of 2008 to stimulate growth as the global financial crisis started to weigh on the economy.

Special Report:  Global Financial Crisis