South Korea's Proactive Economic Boost Amid Political Turmoil

South Korea's finance ministry has pledged 'unlimited' liquidity to stabilize financial markets following President Yoon's temporary martial law declaration. This move aims to mitigate economic impacts amid political instability. Emergency measures, including special repo operations and a stabilization fund, have been established to support market recovery.

In a decisive move to bolster financial stability, South Korea's finance ministry announced on Wednesday its preparedness to inject 'unlimited' liquidity into the markets. This announcement came shortly after President Yoon Suk Yeol retracted a martial law declaration that had significantly impacted the won, driving it to multi-year lows.

Financial markets showed signs of recovery in Wednesday's trading session, with the won appreciating and stocks recovering some of their losses. However, investors remain cautious about South Korea's longer-term political stability, as the nation aims to further globalize its markets. The government emphasized that all financial, FX, and stock markets will continue to operate as usual.

The Bank of Korea has initiated special repo operations to facilitate smooth market functioning and has relaxed repo collateral policies by accepting bank debentures from certain state-run enterprises. Furthermore, the financial regulator stands ready with a 10 trillion won stock market stabilization fund to support the recovery process.

(With inputs from agencies.)