South Korean Stocks Plunge as Martial Law Declaration Sparks Political Crisis
South Korean stocks fell sharply on Wednesday, with the benchmark index dropping 2% to hit an over two-week low, as the country was plunged into a potential political crisis following President Yoon Suk Yeol’s surprise declaration and subsequent lifting of martial law.
The won, the South Korean currency, also weakened, hovering around two-year lows as investors scrambled to react to the unprecedented move. The won’s pair against the US dollar rose 0.1% to 1,415.78 won, after surging as high as 1,444.05 won in overnight trade, its highest level since November 2022.
The sudden declaration of martial law, which was heavily opposed by the Parliament, has raised concerns about heightened political turmoil and potential economic instability. The Bank of Korea has called a special meeting to discuss the situation, although analysts believe monetary policy will not be altered.
The White House has expressed relief that President Yoon has changed course, given the significant implications for the country’s stability and the presence of nearly 30,000 US troops stationed in South Korea. The incident has created uncertainty in the political landscape and economy, with ING analysts warning that it could impact South Korea’s sovereign credit rating.
