South Korea Declares State of Emergency as Won Falls to Two-Year Low Against US Dollar

The South Korean won experienced a significant decline against the U.S. dollar on Tuesday following President Yoon Suk Yeol's announcement of a state of emergency. The U.S. dollar surged by 1.4% against the won, with the latter hitting a new two-year low in response to the news.

South Korean won falls sharply against the US dollar

The financial markets also reacted sharply to the announcement. The MSCI South Korea ETF plummeted by over 4%, reaching a fresh 52-week low, while the Franklin FTSE in South Korea witnessed a 3% decline.

During an unannounced televised briefing, President Yoon accused opposition lawmakers of exerting control over parliament, thus plunging the nation into a political crisis. The implications of the state of emergency on the country's governance and democratic processes in the upcoming weeks remain unclear.

President Yoon assumed office in May 2022 after securing victory in the presidential election by the narrowest margin in the history of South Korea. His foreign policy approach has been characterized by a hardline stance on North Korea, accompanied by efforts to strengthen ties with the U.S. and Japan.