South Korean received, ETFs tumble after govt declares martial legislation

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The South Korean received dropped to a greater than two-year low in opposition to the U.S. greenback on Tuesday, whereas alternate traded funds linked to South Korean shares fell after President Yoon Suk Yeol declared martial legislation in an unannounced late-night deal with dwell on YTN tv.

The South Korean unit fell to as little as 1,430.82 received per greenback, the bottom since October 2022. It was final down 1.9% at 1,430.60.

“It is uncertainty pushed.. a type of ‘shoot first, ask questions later’ (strikes),” mentioned Christopher Wong, FX and charges strategist at OCBC in Singapore. “Given the lack of expertise, the uncertainty should maintain Korean received below stress within the interim.”

Yoon mentioned he had no selection however to resort to such a measure so as to safeguard free and constitutional order, saying opposition events have taken the parliamentary course of hostage to throw the nation right into a disaster.

Shares listed abroad swooned. The MSCI South Korea ETF fell 4.5%, whereas the Franklin FTSE South Korea ETF slid 3.2%.

With losses of greater than 9% to this point this 12 months, the received is one in all Asia’s worst performers and has been persistently below stress because the Financial institution of Korea lower charges aggressively to help the economic system and as traders fled a market they see as uncovered closely to exports and to U.S. commerce tariffs on China.

“The Korean received is already below stress from the looming menace of tariffs and their detrimental influence on export-driven economies,” mentioned Rong Ren Goh, a portfolio supervisor within the fastened revenue staff at Eastspring Investments in Singapore.

“This newest improvement is prone to exacerbate the foreign money’s weak point, encouraging speculators to make use of the received as a high-beta proxy for expressing tariff-related dangers.”