South Korean police have stepped up security as the world's top finance officials fly to the divided peninsula where the two Koreas have been exchanging their most war-like rhetoric in years.
The mounting tension follows the March sinking of the South Korean Cheonan warship, which Seoul says its reclusive neighbour blew apart with a torpedo.
South Korea is hosting a Group of 20 meeting of the world's top wealthy and emerging economies on Friday and Saturday.
US Treasury Secretary Timothy Geithner and European Central Bank President Jean-Claude Trichet are among the dozens of top officials meeting in the southern port city of Busan to find ways to lift the bruised global economy.
"Since the meeting is being held soon after the Cheonan incident, it's understandable that foreign countries might vaguely think of South Korea as a dangerous country," Lee Kang-deok, commissioner of the Busan Metropolitan Police Agency, said in an interview on Friday.
The angry threats across the border became another factor to rattle financial markets, already worried by the fallout from the euro zone problems.
The geopolitical risk from North Korea is also a major element in the so-called Korea discount that some analysts say marks down the South's financial assets relative to its peers.
"It (the Korea discount) is very unfair. Police will do their best to assure South Korea is really a safe country," Lee said.
He said the city's entire 10,000-strong police force was on alert.