South Korean Won Faces Pressure Amid Political Crisis
The South Korean won faced significant depreciation on Thursday, dropping past the 1,415 per US dollar mark, approaching its lowest level in more than two years. This decline reflects the rising political uncertainty as South Korea’s President Yoon Suk Yeol confronts a challenging impeachment motion.

Opposition parties, which hold a majority in South Korea's National Assembly, filed articles of impeachment against President Yoon, citing his failed attempt to impose martial law amid recent national security concerns. The impeachment motion, if passed, would trigger a Constitutional Court review, a process that could take several months, potentially prolonging the period of uncertainty.

Political Uncertainty and Market Impact
The threat of an impeachment process has unnerved investors, leading to a sell-off of the won and a broader loss of investor confidence in South Korea's political stability. Despite the ruling People Power Party pledging to block the impeachment motion, the political deadlock and the potential for months of uncertainty are casting a shadow over the country's economic outlook.

Political uncertainty has historically had a negative impact on emerging market currencies like the won, as it raises concerns about the effectiveness of economic policy and governance stability. The won's fall also reflects broader market nervousness related to the impeachment proceedings.

Government Market Stabilization Measures Announced
In an attempt to counter the adverse effects of political instability, the South Korean finance ministry unveiled a 40 trillion won ($28.35 billion) market stabilization package. This package is intended to shore up investor confidence and stabilize the currency, particularly in the face of external pressures and political upheaval.

The government’s decision to deploy such a large sum underscores the gravity of the situation. However, experts remain cautious, noting that without political stability, such market measures may not fully mitigate the effects of growing uncertainty.

South Korea’s Economic Growth Amidst Uncertainty
Amid this political turbulence, South Korea’s economy has shown signs of resilience. For the third quarter of 2024 (Q3), the country’s economy grew by 0.1%, rebounding from a 0.2% contraction in the previous quarter. Annual growth for Q3 stood at 1.5%, matching advance estimates.

This recovery is encouraging, as it suggests that South Korea's economic fundamentals remain intact despite the ongoing political crisis. The positive GDP growth was driven by gains in exports, particularly in semiconductors, which have been a key growth driver for the country’s economy.

Despite these growth indicators, political instability continues to overshadow the economic outlook, with investors wary of the potential for prolonged gridlock and the possible repercussions of a constitutional review of President Yoon’s impeachment.

Conclusion
The South Korean won is under significant pressure, weakened by rising political uncertainty and the threat of an impeachment process against President Yoon. While the country has implemented market stabilization measures, these efforts may be insufficient if political instability persists.

Economic growth, which showed a positive rebound in Q3 2024, remains a silver lining, but investor sentiment will likely remain subdued as the political crisis continues to unfold. The situation will require careful monitoring as the Constitutional Court prepares for its review of the impeachment motion and as the government seeks to balance market support with political stability.