South Korean won falls sharply against the U.S. dollar after president declares martial law

South Korea’s won on Tuesday fell sharply against the U.S. dollar shortly after President Yoon Suk Yeol declared an emergency marital law.

The U.S. dollar was last seen trading up 2.3% against the won, which notched a fresh two-year low on the news.

Speaking during an unannounced televised briefing, South Korea’s Yoon accused opposition lawmakers of controlling the parliament and throwing the country into a political crisis.

“I declare martial law to protect the free Republic of Korea from the threat of North Korean communist forces, to eradicate the despicable pro-North Korean anti-state forces that are plundering the freedom and happiness of our people, and to protect the free constitutional order,” Yoon said, according to a Reuters translation.

Yoon leads South Korea’s conservative People Power Party and has been deadlocked in negotiations with the liberal opposition Democratic Party over the 2025 budget bill.

Yoon assumed office in May 2022 shortly after winning the presidential election by the narrowest margin in the country’s history.

His foreign policy stance has been dominated by a hardline stance on North Korea, while seeking to strengthen ties with the U.S. and Japan.

The MSCI South Korea ETF fell more than 4% on the news, notching a new 52-week low, while the Franklin FTSE in South Korea slipped 3%.

U.S.-listed shares of Korean-based firms were also lower. Shares of Coupang and Posco Holdings were both off around 6%, while KT Corp and KB Financial slipped 3% and 1%, respectively.

South Korea’s Martial Law Commander and Army General Park Ahn-soo said Tuesday that several measures were to come into force from 11 p.m. local time (9 a.m. ET) “to safeguard liberal democracy and protect the safety of the people against anti-state forces threatening to overthrow the Republic of Korea.”

Park said all political activities and any act that denies or seeks to overthrow the liberal democratic system would be prohibited.

All media and publications will be subject to the control of Martial Law Command and strikes and “gatherings that incite social order” were also said to be forbidden.

Park said medial professionals would need to return to work within 48 hours and measures would be implemented to minimize inconvenience for ordinary citizens, “except for anti-state forces and those attempting to overthrow the system.”