Following the impeachment of President Yoon Seok-yeol, South Korea’s acting president and finance ministry reiterated their commitment to maintaining the stability of the country’s financial and foreign exchange markets amid ongoing political turmoil.
Yoon was impeached on Saturday for trying to impose martial law in the country earlier this month.
Dear Prime Minister Han Deok-soo, long term technocratUnder the constitution, he was actually elevated to acting president.
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As part of his first moves as acting president, Han Kuo-yu reassured financial markets by assuring that the country would “implement its foreign and security policies without interference.”
He also spoke to U.S. President Joe Biden in an effort to reassure America’s biggest ally, while also vowing to maintain military readiness to prevent national security violations by archrival North Korea.
To further calm nerves, the main opposition party announced it would not seek to impeach South Korea’s president over his involvement in President Yoon’s decision to impose martial law.
The moves caused South Korea’s stock market to open at its highest in more than two weeks on Monday. The South Korean won also strengthened and benchmark bond yields rose.
But the Kospi gave up most of its gains at the close as investors took profits after seeing gains of more than 4% over the past five sessions.
South Korea’s Kospi rebounded from a 13-month low after Mr Yoon’s declaration of brief martial law and the ensuing political crisis spooked markets. The crisis has also pushed the South Korean won to a two-year low.
“Political risks have reduced and uncertainty is now manageable,” Han Ji-young, a market analyst at Kiwoom Securities, told Reuters.
economic worries
Continued uncertainty about the future of financial and foreign exchange markets stems from concerns about political instability in the country may last several months.
Earlier on Monday, South Korea’s finance minister, the governor of the Bank of Korea and top financial regulators met to pledge round-the-clock monitoring of financial and foreign exchange markets.
It comes after the Treasury Department vowed on Sunday to continue deploying market stabilization measures quickly as needed.
The ministry said it would actively communicate with parliament to maintain economic stability, adding that it planned to publish a semi-annual policy plan before the end of this year.
The Bank of Korea also stated that it will cooperate with the government to use all available policy tools to respond to and avoid the escalation of financial and foreign exchange market volatility.
The bank said that due to the intensification of external conditions challenges such as increased uncertainty in the trade environment and intensified global competition in key industries, it is necessary to respond more proactively to the economic impact than during the past presidential impeachment period.
South Korea’s financial regulator said in a statement that financial markets are expected to stabilize as recent events are viewed as temporary shocks, but market stabilization funds will be expanded if necessary.
What will happen next after Yoon Eun-hye is impeached?
Even with an acting president, South Korea’s international partners still face months of uncertainty before a new president is elected and a new government is formed, experts said.
Mr Yin remains defiant and has vowed to fight for his political future. Prosecutors said he has not yet appeared for questioning in response to a subpoena from the criminal investigation.
A police official told Reuters that a joint team from the police, defense ministry and anti-corruption agency planned to summon him for questioning on Wednesday.
Yin and some senior officials may face charges of rebellion, abuse of power and obstruction of people’s exercise of rights.
Meanwhile, South Korea’s Constitutional Court began reviewing Yoon’s impeachment case on Monday.
The court has up to six months to decide whether to remove Yin or reinstate him. If he is dismissed or resigns, new elections will be held within 60 days.
The court will hold its first public hearing on December 27.
- Reuters, with additional editing and input by Vishakha Saxena
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