Finance minister Choi Sang-mok held conference calls with S&P Global, Moody’s Investors Service, and Fitch Ratings, and told them that all institutions in the nation were working normally, according to a statement released on Friday by the ministry.
(Dec 13): South Korea’s finance minister called the global heads of sovereign coverage at major credit rating firms, to reassure them over the possible impact of the nation’s political turmoil.
He added that the impact to the economy seen during two previous presidential impeachments was limited, and indicated that the developments would not generate problems for economic activity in the country.
The calls come amid ongoing political turmoil as President Yoon Suk Yeol battles to cling to power. The opposition and some members of his own ruling party are seeking to oust him after his short-lived martial law decree last week. Yoon’s shock move on Dec 3 rocked markets, and stunned the nation and its allies.
The South Korean won plunged 2.9% to its lowest level against the dollar since 2009, in the immediate aftermath of Yoon’s move, while the Kospi equities benchmark had shed about 5.6% by Monday.
Since then, the stock market has regained ground. Shares were up 0.3% on Friday, and were close to erasing all the losses. The won was down 0.3% on Friday at around 1433.95, as it edged back towards its recent low.
Monetary authorities moved quickly to contain concerns about the country’s economy and market, in the wake of Yoon’s call, pledging to supply unlimited liquidity if needed. The Bank of Korea bought 14.1 trillion won (RM43.5 billion) of bonds by repurchase agreements last week, to help stabilise the market.
Choi said on Wednesday that the country was doing its best to stabilise the foreign exchange market, through “smoothing operations”.
Still, the currency remains the worst-performer in Asia, down more than 10% in the year.
Opposition parties are aiming to hold another vote on impeaching Yoon on Saturday. The ballot has a higher possibility of success this time around, as the ruling party chief won’t impose a boycott of the vote, and some members of the party have said they will back the motion.
Even with a successful impeachment vote, the Constitutional Court would have 180 days to decide on whether to approve it and if it did, a presidential election wouldn’t take place for another two months after that. In the interim, the prime minister would likely run state affairs.
South Korea currently has an Aa2 rating at Moody’s, AA at S&P, and AA- at Fitch. The outlook of all three agencies for the country remains “stable”.
Uploaded by Liza Shireen Koshy
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