South Korea's Emergency Measures to Stabilize Financial Markets

By Cynthia Kim

SEOUL (Reuters) – South Korea's finance minister announced on Wednesday that the government would implement all possible measures to stabilize financial markets in response to President Yoon Suk Yeol declaring martial law during an emergency national address.

"We will mobilize all possible financial and foreign exchange market stabilization measures, including unlimited liquidity injections," said Choi Sang-mok at an emergency meeting with top economic officials in Seoul.

The Korean won fell to 1,430 per dollar, marking its lowest value since October 2022, and also significantly declined against the yen, reaching 961.89 per 100 yen, a drop of 2.5%.

On the same day, South Korea's parliament, with 190 of its 300 members present, passed a motion requiring President Yoon Suk Yeol to lift the martial law, as broadcasted live on TV.

Last week, the opposition Democratic Party cut 4.1 trillion won from the 677.4 trillion won ($470.7 billion) budget proposal submitted by Yoon's government, which has led to a parliamentary deadlock over the 2025 annual budget.

The parliament speaker halted the revised budget's progress towards a final vote for the time being. A successful budget intervention by the opposition could significantly impact Yoon’s minority government and reduce fiscal spending, especially as export growth is slowing.

The finance ministry announced the intention to hold another emergency meeting among top officials at 7 a.m. local time (1930 GMT).

"These events will leave a huge dent in investor confidence in the economy and its financial markets," Capital Economics commented in a report.