South Korea’s constitutional court has convened for its first hearing to determine the fate of suspended President Yoon Suk Yeol. The recent political instability has taken a toll on both the economy and crypto sector. The won and Korea’s favorite coin, XRP, do not appear to have been significantly affected so far.
Initially, the South Korean crypto markets experienced a decline as the news of Han’s impeachment became public. The weeks that followed saw the value of XRP, the world’s fifth-largest crypto by market capitalization, decline by over 3%.
KRW and XRP regain stability in South Korea
Currently, the XRP/KRW trading pair has stabilized after it surged by 0.92% in 24 hours. However, Korea’s largest exchange, Upbit has experienced a drop compared to other exchanges.
South Korea’s won also experienced a comparable decline, plummeting to its lowest point in nearly 16 years. It has declined beyond the 1,480 per dollar threshold. Since then, the won appears to be stabilizing at 1459 per dollar currently.
Additionally, the currency’s value decreased by more than 12% within the last year, rendering it the most vulnerable currency in emerging Asia.
According to reports, the economic depression has been exacerbated by political tensions, concerns regarding economic mismanagement, and apprehensions regarding US tariffs.
Notably, in December, the Bank of Korea reduced its benchmark interest rate to 3% in response to a 1.9% decrease in inflation levels. However, there have not been immediate effects yet.
President Yoon Suk’s first impeachment trial
The first trial against President Yoon Suk Yeol in South Korea’s constitutional court finished within four minutes due to Yoon’s absence. His attorneys had previously stated that he would not be present for his own safety, as a warrant had been issued for his arrest on separate accusations of insurrection.
The suspended president will be duly removed from office only if at least six of the eight-member bench vote to uphold the impeachment.
According to South Korean law, the court must set a new date for a hearing before they can proceed without his participation. The next hearing is scheduled for Thursday.
President Yoon’s attorneys have stated that he will attend a hearing at the appropriate time. However, they have objected to the court’s “unilateral decision” regarding trial dates. Since parliament voted to impeach him on December 14, Yoon has refrained from making public statements and has instead been communicating through his attorneys.
Meanwhile, investigators are preparing for another attempt to apprehend Yoon for alleged insurrection. The previous attempt, which occurred on January 3, was unsuccessful due to an hours-long standoff with his security team.
Notably, Yoon is the first incumbent South Korean president to be arrested. According to local media, the second attempt to apprehend him could occur as early as this week.
What’s next for the economy?
According to a local Korean magazine, “The martial law and political instability over the impeachment of the president are eroding South Korea’s international credibility. While the indicators themselves have not yet reached a worrisome level, if external perceptions of South Korea’s economy become fixed in a negative light, this alone could exacerbate the situation.”
In the same light, analysts have reported that South Korea‘s economy is experiencing a significant decline in growth rate due to a decrease in export growth and a severely weakened domestic demand. The ongoing political conflict will rapidly erode the confidence of both domestic and foreign investors, as well as consumer sentiment, a consequence of a deteriorating economic foundation.
As a result, a sudden decline in exchange rates would severely impact South Korea’s economy, which is heavily dependent on the importation of raw materials and energy. Also, a stronger US dollar would increase the cost of raw materials and the burden of dollar-denominated debt, thereby endangering the country’s businesses.
Additionally, rising import prices would exacerbate the financial strain on vulnerable groups, further exacerbating the stagnation in consumption.
However, research analyst Rory Green believes the impeachment of South Korea’s president of the People Power Party will result in significant economic growth. According to Green, “A DPP president would increase fiscal expenditure boosting H2/25 activity and likely tilt foreign policy towards closer ties with Beijing and Pyongyang,”
Rory Green asserted that South Korea’s economy has the potential to expand beyond its current estimated GDP rate of 2.2%, which is slightly below its average post-pandemic growth rate of 2.75%.
A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.
