Andreja Stojanovic
On Tuesday, December 3, the world witnessed a strange show of instability and defiance in one of the U.S.’s closest allies: the Republic of Korea.
Specifically, President Yoon Suk Yeol’s sudden declaration of emergency martial law triggered parliamentarian opposition, popular protest, the deployment of the military into Seoul, and, just hours later, the lifting of the extraordinary measures.
The chaos of the situation – which, on the finance side, ensured South Korean regulators were considering whether to open the nation’s stock market during the crisis – also pushed the won to its lowest exchange rate against the American dollar since 2022.
The won plummets on South Korean martial law declaration
Approximately an hour after the President’s sudden address to the nation – and, arguably, after just enough time had elapsed for the political crisis to become known globally – the USD to KRW exchange rate reached its greatest recent extreme.
At the height, one American dollar could have been exchanged for over 1,428 won. Still, the relative leveling of the rate to $1 for ₩1,415 demonstrates the damage the uncertainty emerging from the martial law proclamation caused.
Furthermore, it remains unclear if the December 3 crisis will persist, albeit in a starkly different fashion, as many commentators have interpreted President Yoon Suk Yeol as a presidential coup attempt and are keen on his departure from office or even arrest.
The stance, however, is reportedly not universal despite the tense situation, the politician’s low approval rating even before declaring martial law, and the relatively large number of scandals plaguing the presidency.
Won’s weakness vs. USD predates the political crisis
FInally, not all of the won’s weaknesses against the U.S. dollar can be attributed to the political chaos that unfolded on December 3. The South Korean currency – just like many other currencies around the world – has been losing ground vs. USD since early November.
The big reason behind such a move – a move that saw the exchange rate go from 1,379 on November 1 to 1,400 on December 2 – was Donald Trump’s re-election as president of the United States and the associated rocketing of dollar indices.
The same move is visible with the USD’s rate against the British pound, the euro, the Chinese Yuan, the Japanese Yen, and, perhaps most dramatically, the Russian Ruble.
Featured image via Shutterstock
