The swift lifting of martial law indicates a strong parliamentary response to political unrest and its potential economic implications.
The government's commitment to providing unlimited liquidity reflects a proactive approach to stabilize financial markets amid political uncertainty.
The fluctuations in the stock market and currency highlight the sensitivity of South Korea's economy to political developments.
If political tensions continue, further interventions by the government may be necessary to stabilize the financial markets.
The recovery of the won may be short-lived if investor confidence remains shaken by political instability.
Future economic policies will likely focus on restoring investor confidence and ensuring market stability.
South Korea's stock market experienced a decline following the declaration of martial law by President Yoon Suk-yeol, which was subsequently lifted by parliament. The Kospi index fell by 1.44%, closing at 2,464, while the KOSDAQ dropped 13.65 points to 677.15. The Kospi 200 futures index also saw a significant decrease of over 5% before slightly recovering to close down 1.8%.
In response to the market turmoil, the South Korean Finance Ministry announced plans to inject 'unlimited liquidity' into the financial markets to stabilize them. This decision followed an emergency meeting of economy ministers and aims to ensure the smooth operation of equity, bond, short-term financing, and foreign exchange markets.
The South Korean won initially fell to its lowest level since October 2022, trading at 1,442 won to the dollar after the martial law declaration. However, it has since recovered to 1,413.34 won to the dollar.
