Yoon’s impeachment expected to ease market uncertainty amid power vacuum concern

Seoul: The National Assembly’s decision to impeach President Yoon Suk Yeol is expected to help remove some of the uncertainties that have hit the financial and foreign exchange markets since Yoon’s shocking martial law declaration, experts said.

But concerns linger over South Korea’s urgent response to economic challenges amid the lack of political leadership, such as policy changes under the new Donald Trump administration and weak growth momentum.

The parliament passed the motion to remove Yoon from office in a 204-85 vote Saturday following his short-lived martial law declaration on December 3, reports Yonhap news agency.

“Now that the impeachment motion is passed, the market is expected to be somewhat stable as uncertainties from the political side have very much been eased,” Lee Kyung-min, an expert from Daishin Securities, said.

Following the martial law declaration, the stock market tumbled to a yearly low and the Korean won fell sharply to well below 1,400 won against the U.S. dollar.

But the stock market has nearly recovered after financial authorities vowed to inject unlimited liquidity and implement additional measures in a bold and swift manner, if needed.

“Last week’s failure to impeach Yoon had stoked fears among investors about how things may unfold. Market concerns are often eased when the political process enters a phase widely anticipated by the market,” Kwak Byung-yeol, a researcher at Leading Investment Securities, said.

Last Saturday, the first motion to impeach Yoon failed due to a lack of quorum as all but three ruling People Power Party lawmakers boycotted the vote.

Officials have said the economic impact seen during two previous presidential impeachments had been limited, and that the country continues to maintain a stable economic system and strong fundamentals.

Currently, South Korea has an Aa2 rating at Moody’s, AA at S&P and AA- at Fitch. The outlook of the three credit appraisers for the country remains “Stable.”

The Korean won is also expected to gain ground, though volatility may continue for some time given remaining procedures regarding the impeachment decision and the strong dollar, according to experts.

The Constitutional Court has up to 180 days to determine whether to remove Yoon from office or restore his powers.

Prime Minister Han Dukk-soo will serve as acting president in the meantime.

“Investors will now likely turn their eyes to such global issues as the Trump factor and the Federal Reserve’s rate decision,” Shinhan Bank expert Baek Seok-hyun said.

The political turmoil leading to Yoon’s impeachment came at a time when the country braces for the second Trump presidency, which has been cited by many as the biggest downside risk for the export-driven Korean economy.

Trump has vowed to impose “universal baseline tariffs” of a minimum of 10 percent on all imported goods, and raise tariffs on imports from China to as high as 60 percent.

—IANS