- The KRW shattered on Tuesday after SK President declared martial law.
- SK President Yoon Suk Yeol’s martial law call ran aground of South Korean lawmakers.
- The KRW plunged to its lowest levels since mid-2023 after political turmoil.
South Korea’s conservative President Yoon Suk Yeol declared “emergency martial law” early Tuesday in a surprise move that rattled equities with exposure to South Korean markets. South Korea’s President accused the country’s opposition Democratic Party of sympathizing with North Korea and undermining South Korea’s parliament with anti-state activities.
South Korea’s Parliament stepped in hours after President Yoon Suk Yeol’s announcement to soundly reject the South Korean President’s call for martial law. The South Korean Won stabilized slightly, paring back the day’s losses to settle USD/KRW near 1420.00 after the day’s early spike into 1445.00 early Tuesday.
President Yook Suk Yeol has been embroiled in a fierce battle with the opposition party, which is broadly favored to win the next election in 2027. South Korea’s Democratic Party has been pushing for impeachment articles against top conservative officials in prosecutor positions after President Yoon Suk Yeol rejected calls for investigations into multiple government scandals perpetrated by the South Korean President’s wife and several top officials within the conservative People Power Party.
USD/KRW daily chart
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps the offered bias near 1.1360
EUR/USD remains under pressure in the mid-1.1300s following the press conference by the ECB’s Lagarde on Thursday, all after the central bank matched estimates and unanimously lowered its policy rates at its event.
GBP/USD advances to daily highs past 1.3250
GBP/USD is picking up extra upside impulse and is revisiting the 1.3250 zone, or daily peaks, as the US Dollar is trimming part of its earlier advance. The move in Cable remains propped up by a firm tone in the risk complex.
Gold loses traction and revisits the $3,320 zone
Gold burst to another all‑time high, teasing the $3,360 mark per ounce before easing back to the $3,320 zone per troy ounce as the Greeback staged a comeback and Treasury yields firmed across the curve.
Crypto market cap fell more than 18% in Q1, wiping out $633.5 billion after Trump’s inauguration top
CoinGecko’s Q1 Crypto Industry Report highlights that the total crypto market capitalization fell by 18.6% in the first quarter, wiping out $633.5 billion after topping on January 18, just a couple of days ahead of US President Donald Trump’s inauguration.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.