Seoul, Dec 5 (IANS) Bank of Korea (BOK) Governor Rhee Chang-yong said on Thursday that the current political climate surrounding the opposition’s move to impeach President Yoon Suk Yeol is unlikely to affect South Korea’s sovereign ratings and growth momentum given the country’s solid market fundamentals.
Rhee made the point during a press briefing in Seoul, two days after Yoon declared martial law in a surprise late-night address, which was lifted about six hours later after the National Assembly voted to reject it. The opposition side then filed a motion to impeach Yoon, Yonhap news agency reported.
“The Korean won weakened due to the negative news. But it is forecast to rise if there are no new shocks gradually,” Rhee said.
Following the overnight turmoil, the Korean won sank to a two-year low Wednesday, while the stock market tumbled on heavy foreign selling.
Rhee noted that the markets have stabilised and such impacts are not projected to last long, downplaying speculations of the central bank adjusting the country’s growth outlook and monetary policy path.
“The martial law declaration was purely out of political reasons. We can separate such political events from economic dynamics,” Rhee said, stressing that the economic fundamentals are not linked to politics.
“It is hard to forecast how things will unfold regarding the impeachment process, which adds uncertainties to the market. But I also believe that the matter is not likely to give a shock to the market if history serves as any guide,” the chief said.
Rhee clarified that the current political situation is not a factor for the bank to consider in making policy decisions or adjusting the growth outlook.
“I think this is more about psychology. I’ve received a lot of questions and messages from many foreign investors, institutions and friends. As the issue appears to have sent a great shockwave to them, I am trying to fully explain the situation while maintaining close communication with them,” he added.
The martial law was short-lived and a flurry of political developments following the martial law declaration leading to its withdrawal rather demonstrated that the country has a mature democracy and is on a rules-based order, Rhee said.
