Korean Won Rises Against the Dollar as Impeachment Case Boosts Market Sentiment
Following the South Korean Parliament's approval of President Yoon Suk-yeol's impeachment case on Saturday, the Korean won rose significantly against the dollar, with the USD/KRW exchange rate falling by 0.5% to 1,428.90. This rebound ended the won's two-week streak of weakness, during which it had plummeted to its lowest level since 2009 due to political turmoil and emergency law shock.
Constitutional Court to Determine Final Outcome of Impeachment Case
According to South Korean law, the impeachment case approved by Parliament must be submitted to the Constitutional Court for adjudication, with the court having 180 days to make a final decision. If the Court rules in favor of impeachment, South Korea will initiate the presidential election process; if the impeachment is deemed invalid, President Yoon Suk-yeol may be reinstated.
This political turmoil began on December 3rd when Yoon Suk-yeol unexpectedly declared a state of emergency, causing nationwide shock and a severe impact on the Korean won. Concerns over political uncertainty drove up the USD/KRW exchange rate, further disrupting the stability of South Korea's financial markets.
Authorities Intensify Measures to Stabilize Market
With the impeachment case now passed, South Korean authorities are stepping up measures to address market volatility. In a statement on Sunday, the Bank of Korea announced it would collaborate with the government to use all available policy tools to prevent further financial and foreign exchange market fluctuations.
Over the past two weeks, South Korean authorities have almost daily warned of market risks and pledged readiness to intervene at any time to stabilize the market. These assurances have somewhat bolstered market confidence and supported the won's rebound.
Market Outlook: Focus on Political Progress and Policy Trends
Although the won has seen a short-term rise due to the impeachment case's passage, the market remains cautious about the uncertainty in South Korea's political situation. Investors will closely monitor the Constitutional Court's decision process and any further policy actions by South Korean authorities in the financial market.
The Bank of Korea's stance indicates that authorities will take proactive measures to control market volatility and ensure the stability of financial and foreign exchange markets. However, future market trends will still be influenced by political developments, the global economic environment, and external risk factors.
