South Korean won falls, but is off lows amid political chaos in country

South Korea’s won on Tuesday cut losses against the U.S. dollar after President Yoon Suk Yeol said he would lift the country’s first martial law order in more than four decades.

The greenback was last seen about 1% higher against the won. It had traded up as much as 2.7% earlier in the day.

Yoon’s announcement to end martial law came after parliament swiftly rejected his declaration. The country’s currency notched a fresh two-year low against the U.S. dollar after Yoon’s initial decision that the country would go under marital law, which refers to the temporary imposition of military authority over a civilian population and is typically seen during a time of emergency.

Yoon accused opposition lawmakers of controlling the parliament and throwing the country into a political crisis. The move, which hasn’t been imposed in Asia’s fourth-largest economy since 1980, was sharply criticized by opposition lawmakers.

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

The 63-year-old assumed office in May 2022 shortly after winning the presidential election by the narrowest margin in the country’s history. His foreign policy has been dominated by a hard-line stance on North Korea, while Yoon has also sought to strengthen ties with the U.S. and Japan.

Exchange-traded funds and U.S.-listed shares of Korean-based firms tumbled on the news, before staging a recovery after the country’s parliament voted to lift martial law.

The MSCI South Korea ETF was down by 1.6%, after falling as much as 6.5% earlier in the session.

Meanwhile, shares of Coupang and Posco Holdings were off by more than 3% ad 4%, respectively. KT Corp. and KB Financial slipped 0.4% and 1.6%, respectively.