Financial Turmoil in South Korea

Amid escalating concerns over domestic political instability, South Korea's financial markets experienced significant volatility on December 27. The won/dollar exchange rate surged past 1,480 won, a level not seen since the financial crisis, while the KOSPI index plummeted below the 2,400 mark for the first time in four trading days.

Exchange Rate and KOSPI Index Performance

At the Seoul Foreign Exchange Market, the won/dollar exchange rate reached 1,485.5 won by 11:22 AM, marking a significant increase from the previous day's closing price. This surge represents the highest exchange rate in over 15 years, reminiscent of the financial crisis period. Concurrently, the KOSPI index dropped to 2,396.23, reflecting a 1.38% decrease from the previous session. This downturn was influenced by a combination of factors, including the rising exchange rates, ongoing political instability, and dividend ex-rights.

Political Developments and Their Impact

The National Assembly is set to vote on an impeachment motion against Acting President and Prime Minister Han Duck-soo, adding to the political uncertainty. The proposed impeachment follows Acting President Han's announcement regarding the withholding of Constitutional Court judges' appointments until an agreement is reached between the ruling and opposition parties. This political turmoil has raised concerns about the potential impact on South Korea's economic stability and external credibility, as highlighted by Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok during an emergency meeting with cabinet members.