[Exclusive] Lee Bok-hyun: "Impeachment is Better for the Economy in Terms of Predictability"

"South Korean Economy Faces Complex Situation"
Market Turmoil Amid Prolonged Political Uncertainty Possible

Yonhap News

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), stated that as the possibility of prolonged political uncertainty increases following the declaration of martial law, leading to increased volatility in the financial markets, "impeachment improves predictability and is better for the economy."

Governor Lee made these remarks on the morning of the 10th to Asia Economy, saying, "Regardless of the ruling and opposition parties' situations, the current economic situation is not simple."

The reason Governor Lee mentioned 'impeachment' is based on the judgment that if political uncertainty prolongs after the declaration of martial law, it will not only increase financial market volatility but also cause irreversible adverse effects on the Korean economy.

President Yoon Suk-yeol suddenly declared martial law around 10:30 PM on the 3rd. As a result, the KOSPI 200 night futures plunged by up to 4.6% (312.85 points) during trading, and the won-dollar exchange rate soared to 1,444 won, causing turmoil in the financial markets. At that time, FSS executives reported the market situation to Governor Lee in real-time.

About three hours after the declaration of martial law, at 1:30 AM on the 4th, Governor Lee summoned all executives to the FSS office in Yeouido to hold an emergency financial situation review meeting. Martial law was lifted around 4:30 AM that day. Governor Lee and the executives went home briefly to change clothes and returned to work to hold an emergency macroeconomic and financial issues briefing at 7 AM and an expanded FSS financial situation review meeting at 10 AM. Since then, the FSS has been holding financial situation review meetings chaired by the governor two to three times every morning.

Concerns in the market began to grow after President Yoon's remarks were reported. Right after the lifting of martial law, President Yoon reportedly said, "I am not at fault," and claimed that martial law was declared due to the Democratic Party of Korea's violent actions, which sparked controversy. Governor Lee was reportedly shocked by President Yoon's stance.

On the morning of the 6th, when Han Dong-hoon, leader of the People Power Party, held a press conference demanding the prompt suspension of President Yoon's duties, the KOSPI index fell 1.8% during trading, breaking below the 2,400 level. The KOSDAQ also dropped more than 3% at one point during trading, hitting its lowest level in 4 years and 7 months (intraday basis).

Governor Lee described the situation where political uncertainty is shaking the financial markets as "like barely swimming forward 2 km, only to be pushed back 10 km by a tsunami."

Earlier, market analysts had predicted that if President Yoon's impeachment motion were passed, stock prices would rise due to the resolution of uncertainty. However, the ruling party decided on a party line opposing impeachment, and with the failure of the impeachment motion against President Yoon on the 7th, market anxiety peaked. On Monday the 9th, the KOSPI and KOSDAQ indices plunged 2.78% and 5.19%, respectively.

Meanwhile, the National Assembly will hold a vote on the second impeachment motion on the 14th. Prior to this, on the 13th, the National Assembly's Political Affairs Committee plans to hold an emergency inquiry by summoning Kim Byung-hwan, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the FSS, to review capital market and economic issues arising from the aftermath of martial law.