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Won plummets, shares dip as impeachment turmoil rattles markets

Published: 27 Dec. 2024, 17:41

SHIN HA-NEE
[email protected]

The local currency is traded at 1,470 won per dollar at a money exchange in Jung District, central Seoul, on Dec. 27, when the won-dollar exchange rate briefly soared above the 1,480 per dollar mark before closing at 1,467.50, up 2.7 won from the previous session. [NEWS1]

The Korean won breached the 1,480 per dollar threshold for the first time in more than 15 years, as escalating political turmoil over an impeachment motion against the acting president, coupled with strong U.S. employment data, caused the currency to plunge against the greenback on Friday.

In response to weakening economic sentiment amid growing internal and external uncertainties, the government pledged to promptly inject 11.6 trillion won ($7.8 billion) from next year’s budget to alleviate burdens on livelihoods.

The won closed at 1,467.5 per dollar, up 2.7 won from the previous session, by the end of regular trading at 3:30 p.m. Friday. After opening at 1,467.5, the won-dollar rate surpassed 1,470 won per dollar at 9:15 a.m., continuing to surge to 1,486.70 mid-session. This marked the weakest point during regular trading since March 16, 2009, when the rate hit 1,488 won per dollar.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,404.77, down 24.90 points, or 1.02 percent, ahead of an impeachment vote against acting President Han Duck-soo on Dec. 27. The won-dollar exchange rate stood at 1,467.50 per dollar as of 3:30 p.m., up 2.7 won from the previous session. [YONHAP]

The impeachment vote against acting President Han Duck-soo drove the won-dollar exchange rate throughout the day. The National Assembly passed the motion, with NNN lawmakers supporting the impeachment. However, the conservative People Power Party (PPP) claims the vote is invalid, as the motion requires a two-thirds majority, not a simple majority.

Meanwhile, weekly U.S. employment data showing fewer jobless claims than expected bolstered the case for a slower Federal Reserve rate cut, putting additional devaluation pressure on the won.

The Kospi closed at 2,404.77, down 24.9 points or 1.02 percent from the previous session. During trading, it dipped below the 2,400 mark, hitting a low of 2,388.33 at 12:13 p.m. The Kosdaq fell 9.68 points, or 1.43 percent, to close at 665.97.

Amid mounting market concerns, the government met with PPP lawmakers on Friday morning to announce its budget plan to stimulate sluggish domestic demand next year. The plan includes a swift budget execution of 11.6 trillion won for living cost stabilization, a 50 billion won loan program to boost the tourism industry and filling 90 percent of senior hiring positions by the first quarter of next year.

The Ministry of Economy and Finance said that it would expedite the budget implementation process to an all-time high in the first half of next year.

In a release following an emergency meeting on macroeconomic and financial issues, financial authorities stressed that resolving internal and external concerns regarding the suspension of government operations through political measures should take priority. The meeting was attended by Finance Minister Choi Sang-mok, Bank of Ko-rea Gov. Rhee Chang-yong and Financial Services Commission Chairman Kim Byoung-hwan.

In addition to the changes in foreign exchange rules announced on Dec. 20 to encourage higher foreign currency inflows, the government plans to introduce measures to improve foreign investment infrastructure in next year’s Economic Policy Directions, set to be announced next week.

BY SHIN HA-NEE [[email protected]]