Impeachment of Yoon Anticipated to Alleviate Market Instability Amid Leadership Void
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Seoul, Dec 15 (NationPress) The National Assembly's vote to impeach President Yoon Suk Yeol is projected to mitigate some uncertainties affecting the financial and foreign exchange markets following Yoon's unexpected martial law announcement, according to experts.
However, worries remain regarding South Korea's immediate response to economic challenges amidst a political leadership void, including potential policy shifts under the new Donald Trump administration and sluggish growth.
The parliament approved the impeachment motion with a vote of 204-85 on Saturday, following Yoon's brief martial law declaration on December 3, as reported by Yonhap news agency.
"With the impeachment motion now passed, the market is expected to stabilize somewhat as political uncertainties have significantly diminished," stated Lee Kyung-min, an expert from Daishin Securities.
After the martial law declaration, the stock market plummeted to a yearly low, and the Korean won sharply declined to below 1,400 won against the U.S. dollar.
However, the stock market has nearly bounced back following commitments from financial authorities to inject unlimited liquidity and enact additional measures promptly if necessary.
"The previous week's failure to impeach Yoon heightened investor anxieties regarding future developments. Market concerns typically ease when the political process enters a phase anticipated by investors," explained Kwak Byung-yeol, a researcher at Leading Investment Securities.
Last Saturday, the initial impeachment motion failed due to a lack of quorum, as all but three lawmakers from the ruling People Power Party abstained from voting.
Officials have indicated that the economic impact observed during the two prior presidential impeachments was limited, and the nation continues to uphold a stable economic framework and robust fundamentals.
Currently, South Korea holds an Aa2 rating from Moody's, AA rating from S&P, and AA- rating from Fitch, with a "Stable" outlook from all three credit rating agencies.
Experts predict that the Korean won may strengthen, although volatility could persist due to ongoing impeachment procedures and a strong dollar.
The Constitutional Court has up to 180 days to decide whether to remove Yoon from office or reinstate his powers.
In the interim, Prime Minister Han Dukk-soo will act as president.
"Investors will likely shift their focus to global issues such as the Trump factor and the Federal Reserve's interest rate decisions," noted Baek Seok-hyun, an expert from Shinhan Bank.
The political upheaval leading to Yoon's impeachment coincides with the country preparing for a potential second term of Trump, which many view as a significant downside risk for the export-driven Korean economy.
Trump has promised to impose "universal baseline tariffs" of at least 10 percent on all imports and to raise tariffs on Chinese imports up to 60 percent.
