South Korea neither confirmed nor denied media reports Friday on the apparent transfer of Iranian funds frozen here under U.S. sanctions but expressed hopes for a "smooth" resolution of the issue, a major thorn in the country's relations with Tehran.

"We have nothing to confirm at this point," a foreign ministry official told reporters. "The government has engaged in close consultation with relevant countries, including the U.S. and Iran, to address the issue of the frozen funds, and we hope this matter can be resolved smoothly."
Citing a source, Iran's state-run Islamic Republic News Agency (IRNA) reported the Iranian funds in South Korea have been changed into euros in a bank in Switzerland.
Relations between Seoul and Tehran have frayed due to $7 billion in Iranian funds locked in two Korean banks under U.S. sanctions, which were reimposed after then U.S. President Donald Trump withdrew from a 2015 nuclear deal in 2018. Tehran has long called on Seoul to release the funds.
Tensions between the U.S. and Iran have posed a tricky diplomatic challenge to South Korea, which has been striving to strengthen its treaty alliance with Washington and its economic partnership with the Islamic republic.