South Korea’s benchmark Kospi index experienced a 2% decline upon opening on Wednesday morning local time, but swiftly rebounded to trade down 1.0%. This fluctuation in the market was accompanied by a strengthening of the South Korean currency, the won, against the US dollar. The won had previously plummeted to a 2-year low following the declaration of martial law.
Despite these initial setbacks, economists at investment bank Citi expressed optimism in a research note issued on Wednesday. They suggested that any negative impacts on the economy and financial markets could be short-lived. The economists highlighted the potential for uncertainties in the political and economic landscapes to be swiftly mitigated through proactive policy responses.
Citi's research note pointed to the commitment of policy-makers to inject 'unlimited liquidity' into the financial markets to promote stability. Additionally, an emergency central bank meeting scheduled for Wednesday was seen as a proactive step to address the evolving situation.
