Exchange Rate Soars Amid Martial Law... Won-Dollar Rate Hits Highest in Over 2 Years (Comprehensive)

Following the aftermath of the declaration of martial law, the won-dollar exchange rate closed at its highest level in over two years during weekly trading on the 4th.

Yonhap News

On that day, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,410.1 won, up 7.2 won from the previous trading day's weekly closing price (3:30 PM). This is the highest closing rate in 2 years and 1 month since November 4, 2022 (1,419.2 won).

The exchange rate opened at 1,418.1 won, up 15.2 won from the previous day's weekly closing price, and fluctuated between 1,406 won and 1,418 won during the session.

This was due to increased political instability following President Yoon Seok-yeol's declaration and subsequent lifting of martial law the previous day. In the early morning, the exchange rate surged to 1,442 won after the declaration of martial law, then stabilized to the 1,410 won range following the National Assembly's resolution demanding the lifting of martial law.

Accordingly, foreign exchange authorities announced they would make every effort to stabilize the market through liquidity supply and other measures. At 7 a.m. that day, Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok held an emergency macroeconomic and financial issue meeting (F4 meeting) at the Bankers' Hall in Jung-gu, Seoul, with Bank of Korea Governor Lee Chang-yong, Financial Services Commission Chairman Kim Byung-hwan, and Financial Supervisory Service Governor Lee Bok-hyun, stating that liquidity would be supplied without limit for the time being until the stock, bond, short-term money, and foreign currency markets are fully normalized.

The Bank of Korea's Monetary Policy Committee (MPC) also held an emergency MPC meeting related to the declaration of martial law that morning and announced that it would expand short-term liquidity supply to the market through non-regular repurchase agreement (RP) purchases starting that day.

At a press briefing held immediately after the emergency MPC meeting, Bank of Korea Deputy Governor Park Jong-woo said, "Currently, our financial market is somewhat calming down," adding, "However, since various risk factors remain latent, we will take additional measures as necessary depending on the situation."