DIGIVESTASI - South Korean Markets Under Spotlight Following Impeachment of President Yoon Suk Yeol, South Korea’s currency, the won, and its stock market took center stage on Monday as investors assessed the fallout from last weekend’s parliamentary vote to impeach President Yoon Suk Yeol over his controversial decision to declare martial law.

Korean Won Volatility Amid Political Turmoil

The Korean won remains under close scrutiny after significant depreciation during recent political upheavals. Over the past few weeks, the currency has declined more than 2% against the U.S. dollar, primarily due to President Yoon’s abrupt declaration—and subsequent revocation—of martial law on December 3. The won closed last Friday at 1,435.45 per dollar.

So Jaeyong, an economist at Shinhan Bank Co., noted that the passage of the impeachment bill signals a potential easing of South Korea's political uncertainties, which may stabilize the won. “The impeachment could help limit the won’s depreciation around 1,444 per dollar,” Jaeyong commented ahead of the parliamentary vote.

Korean Stock Market Rebounds

The South Korean stock market has shown a notable recovery from pressures caused by the martial law crisis. The benchmark Kospi index gained 2.7% last week, reflecting investor optimism about the prospect of a new president.

However, Monday will serve as a critical test to gauge whether market confidence is genuinely restored, especially since lingering uncertainties remain. The impeachment must be approved by South Korea's Constitutional Court, which has up to 180 days to decide on its validity. If the court upholds the decision, a presidential election must take place within 60 days.

Central Bank’s Response and Market Stability

South Korea’s central bank has pledged to ensure the stability of financial markets. In a statement on Sunday, monetary authorities expressed confidence that market volatility would subside following the impeachment vote.

The won suffered a sharp decline against the dollar after President Yoon’s declaration of martial law. Despite efforts by policymakers to stabilize the market through various measures, the currency remains vulnerable. Market pressures intensified following local media reports that Yoon had considered reimposing martial law and after an earlier parliamentary effort to impeach him failed.

Impact on Government Bonds

The political upheaval has also affected South Korean government bond futures. Three-year bond futures fell 16 ticks to 106.78 by the close of trading on Friday (December 8), while 10-year bond futures registered a steeper decline, losing 77 ticks to reach 119.25 since the start of December.

The market dynamics at the start of this week will serve as a key indicator for investors to assess the economic stability of South Korea in the aftermath of prolonged political turbulence.

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