(Bloomberg) -- Bank of Korea Governor Rhee Chang-yong expressed optimism that market volatility triggered by martial-law turmoil will gradually cool down barring new shocks. He continued his campaign to reassure investors who are casting doubts over South Korea’s economic outlook.
“I’m expecting things will go back to normal without any new shocks,” he said Thursday at a press briefing, adding that the central bank sees no immediate reason to adjust its growth forecasts. He also highlighted how the won has regained some of the strength it lost against the dollar after President Yoon Suk Yeol abruptly declared martial law Tuesday night.
South Korea continues to reel from the commotion that began with the abrupt declaration that Yoon later withdrew, following an overwhelming parliamentary rejection.
Now an opposition coalition is pushing to impeach the president, calling his move an act of treason for trying to shutter the National Assembly unilaterally.
The ongoing drama is keeping financial authorities on edge, drawing a vow from them to keep liquidity flowing as needed. In an interview on Wednesday, however, Rhee dismissed the chance of cutting interest rates just to buffer the impact from what he called a “short-lived” political event.
The BOK last week cut its benchmark interest rate for a second-straight month, seeking to insulate the economy from the potential impact of US policies under Donald Trump. The political crisis surrounding the president adds to risks facing South Korea’s economy as Trump prepares to return to the White House with plans to impose tariffs on trading partners.
With the ruling party balking at the impeachment motion, a political tussle in parliament could erupt and drag out. Rhee said past cases of an extended impeachment row have had limited impact on the economy, and suggested looking at the political row as separate from economic issues going forward.
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