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작성자 : 권진현
소속 : Korea International School Jeju official club BERA (Business Economics Review Associates)
등록일 : 2025.02.14
Current Martial Law’s impact on exchange rate

Arin Lee

South Korea had overall 16 times of martial law declared, since 1948. In December 2024, South Korea faced a noticeable political shift when President Yoon declared martial law, claiming to accuse the anti-state forces or activities of disturbing the whole nation. This unpredicted move had immediate effects on the nation's financial stability, particularly on the exchange rate.

The declaration of martial law led to a sharp depreciation of the Korean won. According to 'The Korea Herald', during the nighttime overseas trading after the announcement, the won's value declined by 1.4%, reaching 1,430 won per U.S. dollar, the lowest level since October 2022. This decline was attributed to heightened political uncertainty, which eroded investor confidence and prompted a sell-off of Korean assets. Financial markets reacted swiftly; the won showed a sudden drop to 1,446.5 per dollar before the National Assembly's intervention (Park 2024).

The fall in the won was led by undermining confidence in South Korea’s impression. Fears of government overreach and potential sanctions can lower the country’s credit rating, further discouraging investment. As a result, the won-lost value rapidly as investors moved over for safer assets, creating a butterfly effect. It is not only a few pauses; these investments showing low will impact the others for a greater loss in investments. As an effect of these losses, South Korea was undervalued by various countries and figures.

President Yoon's declaration of martial law had disadvantageous impacts on South Korea's value itself, leading to a sharp drop in the won and the exchange rate. The instability, brought by a sudden choice, undermined the whole world's evaluation of the nation. Although the actions were taken down quickly, this incident underscored the importance of maintaining political stability to ensure economic resilience without a large fluctuation in the market.

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