How S. Korea’s stock and currency markets respond to passing of second impeachment vote?

SK minister of economy and finance Economy

Following the passing of the second impeachment vote, the country’s financial markets appear to be regaining stability.

Stock Market Trends

In the aftermath of President Yoon’s unexpected martial law declaration and its subsequent swift reversal, domestic stock markets experienced a sharp decline. However, this Monday, following the second impeachment vote on Saturday, the KOSPI opened strongly, surpassing the 2,500 mark and climbing steadily before stabilizing. While the index closed down on Monday, it rebounded on Wednesday, closing up over 1% as foreign investors turned into net buyers for the first time since the initial impeachment attempt.

According to Arirang News, the stock market’s performance indicates relative stability:
“As long as the stock market does not drop significantly beyond the 2,500-point range, a certain level of stability can be maintained.”

Currency Market Fluctuations

The Korean won has exhibited greater volatility. It initially weakened to 1,410 won against the U.S. dollar following the brief imposition of martial law. After the failed first impeachment attempt, the currency surpassed the 1,430 mark, and it has since remained in that range even after the second impeachment vote.

Despite the fluctuations, the situation is not alarming. The Korean won has weakened to around 1,400 against the U.S. dollar, similar to levels during the 1997 Asian financial crisis and the 2008 global financial crisis. However, the underlying factors are different, and as long as it doesn’t surpass the 1,450 mark, it can be considered stable.”

Government Efforts to Reassure Investors

To mitigate the impact of political instability, the South Korean government has taken several measures to bolster investor confidence. The finance ministry has convened numerous meetings with relevant institutions and emphasized its commitment to economic stability.

During a joint press conference for foreign media, Finance Minister Choi Sang-mok outlined the government’s priorities:
“Given ongoing market volatility due to domestic and external uncertainties, the government will work with all sectors to stabilize the economy, prioritizing external credibility.”

The government has pledged to operate a 24-hour monitoring system for financial markets, increase incentives for foreign investment, and involve the private sector in ministerial-level discussions to enhance industrial competitiveness. Additionally, the 2025 budget will be implemented promptly, with a supplementary budget planned to assist vulnerable groups.

Addressing Market Fluctuations

In response to ongoing uncertainties, the government and central bank have implemented measures to address market turbulence. With the Korean won reaching its lowest level since the 2008 financial crisis, the upper limit of the foreign exchange swap line—used by the National Pension Service for overseas investments—has been raised to $65 billion from $50 billion.

An expert interviewed by Arirang News states that “The Bank of Korea should not only supply liquidity but also consider reducing interest rates, as other countries are doing to foster economic growth.”

As South Korea continues to navigate economic challenges amid political uncertainty, its financial institutions and policymakers remain focused on maintaining market stability and investor confidence.

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