FSC chief says impeachment verdict won't shake economy as court deliberations continue

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FSC chief says impeachment verdict won't shake economy as court deliberations continue

Published: 20 Mar. 2025, 16:59 Updated: 21 Mar. 2025, 20:57

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Members of the diplomatic corps, business leaders and other dignitaries pose for a commemorative photo at the 2025 Korea Economic Forum held at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. From left, KB Kookmin Bank CEO Lee Hwan-ju, Ambassador of Finland Jyri Jarviaho, Ambassador of Estonia Sten Schwede, Ambassador of Australia Jeff Robinson, Financial Services Commission Chairman Kim Byoung-hwan, Korea JoongAng Daily CEO Park Chang-hee, Ambassador of Switzerland Dagmar Schmidt Tartagli, Ambassador of Serbia Nemanja Grbic, Ambassador of Argentina Darío César Celaya Alvarez, Ambassador of Czechia Ivan Jancarek, Technology and Innovation Subcommittee under the Presidential Committee on AI Chair Cho Sung-bae, Woori Bank CEO Jung Jin-wan, Yulchon LLC Managing Partner Son Do-il, Ambassador of Latvia Janis Berzins and Hana Bank CEO Lee Ho-sung. [PARK SANG-MOON]

Financial Services Commission (FSC) Chairman Kim Byoung-hwan said the Constitutional Court’s impending verdict on President Yoon Suk Yeol's impeachment, regardless of its outcome, would not heavily impact Korea's economy.

“Financial authorities have consistently maintained the stance that political uncertainties should remain a separate issue from economic affairs,” Kim said Thursday in response to a question about the potential implications of the impeachment ruling during the 2025 Korea Economic Forum (KEF). “Regardless of the outcome, the market will be inevitably affected to some extent. But we believe that the potential implications will be temporary, and within manageable levels.”

The 19th edition of the KEF, hosted by the Korea JoongAng Daily, took place at Lotte Hotel Seoul in central Seoul on Thursday, bringing together foreign dignitaries, major bank chiefs, government officials and industry executives.

Kim’s latest remarks came as the nation awaits the Constitutional Court to finally announce its high-stakes verdict on the impeachment trial of President Yoon, following his botched martial law declaration on Dec. 3.

Financial Services Commission Chairman Kim Byoung-hwan delivers a keynote address during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]

Despite earlier speculation that the ruling would come within two weeks of the final hearing on Feb. 25 — similarly to past two impeachment trials — the court has now been deliberating for more than three weeks and has yet to announce the verdict date.

Kim, along with other financial policy chiefs, has repeatedly insisted that the market is business as usual, at least for the country’s economic system.

“Many expressed their concerns about the Korean economy and financial market after the martial law declaration, and there has been tension in authorities as well,” the chairman said during his keynote speech.

“But as time went on, trust held firm in the resilience of Korea’s democratic system, and in its economy, to operate as usual despite political uncertainty.”

In line with Kim’s observation, most economic indicators — such as stock market indexes and the credit default swap premium on five-year foreign currency bonds — have largely returned to pre-martial law levels.

The local currency, however, remains an exception. Despite the recent depreciation of the dollar, the won’s value is still hovering well below its early December level.

Clockwise from left, Ambassador of Czechia Ivan Jancarek, Woori Bank CEO Jung Jin-wan, Hana Bank CEO Lee Ho-sung, Financial Services Commission Chairman Kim Byung-hwan, Korea JoongAng Daily CEO Park Chang-hee, KB Kookmin Bank CEO Lee Hwan-ju and Ambassador of Australia Jeff Robinson converse during the 2025 Korea Economic Forum at Lotte Hotel Seoul in Jung District, central Seoul, on March 20. [PARK SANG-MOON]

The FSC chief attributed the persistent weakness of the won to Korea’s heavy exposure to U.S. tariffs.

“It appears that the recent foreign exchange rate movement reflects the market’s assessment of potential implications of U.S. tariff policies on each country,” said Kim, indicating that higher trade barriers could disproportionately affect Korea’s export-driven economy.

The indirect impact of heavy tariffs levied on China also weighs on Korea’s fundamentals, Kim added.

But the chairman did not specify a target exchange rate for the local currency, echoing Bank of Korea Gov. Rhee Chang-yong's stated stance that the extent of fluctuation holds priority over the exchange rate itself.

“Although I cannot specify what foreign exchange rate level is appropriate, since the answer would vary depending on perspective, we do believe that the won’s movement should not be overly dissociated from that of the dollar,” Kim stated.

The government will continue to keep a close eye on the foreign exchange fluctuations, the chairman said.

BY SHIN HA-NEE [[email protected]]