South Korea’s ongoing political upheaval continues to derail its economy and crypto markets. XRP and the local currency, the Korean won (KRW), have experienced notable drops in market value amid the impeachment of acting President Han Duck-soo. Investors are now worried that market reactions will reverberate far beyond the country’s borders.
As news of Han’s impeachment unfolded, South Korean crypto markets took a hit. XRP, the world’s fifth-largest cryptocurrency by market cap, saw its value drop by more than 3% over the course of a tumultuous week. South Korea’s won also followed a similar trend, falling to its lowest level in nearly 16 years. It has dipped further than the 1,480 per dollar mark.
US dollar against the won: Source: Tradingeconomics.com
The sell-off in XRP and other digital assets has fueled concerns about broader market volatility. The economic instability in South Korea, compounded by the political crisis, has sparked fears that more disruptions could be on the horizon for the crypto market.
South Korea’s political turmoil and economic fallout
South Korea is one of the largest cryptocurrency trading markets, and the turbulence surrounding Han’s impeachment and the country’s currency has had direct consequences for its digital asset sector.
The political chaos, sparked by Yoon’s controversial martial law declaration on December 3, led to an economic fallout that reflected in a sharp drop in business morale. According to a Trading Economics insight, the index for business sentiment plummeted to 62 in December, the lowest point since July 2020.
XRP, along with other major cryptocurrencies, has seen fluctuations in value as South Korean investors, who represent a substantial portion of the global trading volume, react to the political crisis.
In the early hours of Friday, Ripple’s native token hit a seven-day low against the won, dropping to values slightly below 3,200 before retracing back above 3,300. At press time, XRP is changing hands around the 3,100 to 3,350 won on Upbit.
XRP trading in South Korea – Source: Upbit
Data from TradingView charts also show that Upbit, the largest digital currency trading platform in South Korea, saw a 40% downtick in trading volume over the last day. The market stance scale has been neutral for weeks now, which could mean that investors are uncertain whether to accumulate or sell.
Still, XRP remains the most popular crypto in the country, with its daily trading volume almost doubling that of Bitcoin, the largest crypto by market cap globally, according to Coingecko data.
In an attempt to calm the storm, Finance Minister Choi Sang-mok held an emergency meeting with the Governor of the Bank of Korea and promised “decisive” measures to stabilize the market.
However, these interventions have yet to quell the concerns surrounding South Korea’s financial future. As political instability continues to unfold, market volatility is expected to remain high, putting pressure on both local and international investors.
Han’s impeachment and its political context
South Korea’s National Assembly voted on Friday to impeach acting President Han Duck-soo. This is the second head of state to be ousted this month following President Yoon Suk-yeol’s impeachment. This latest political upheaval comes just two weeks after Yoon’s removal from office, triggered by his controversial imposition of martial law earlier in December.
On December 3, President Yoon declared martial law for six hours, the first such decree since the 1979 military coup. Yoon justified the move as necessary to “protect the constitutional order” and counter what he described as anti-state groups and pro-North Korea forces threatening the nation’s stability, per an NBC News report.
Han’s impeachment was initiated by opposition lawmakers who criticized the acting president’s refusal to immediately appoint three justices to the Constitutional Court. These appointments enables the court to decide whether to uphold Yoon’s impeachment or reinstate him to office.
The ruling People Power Party, which Han belongs to, argued that filling these vacancies goes beyond the scope of Han’s duties as acting president.
The impeachment vote saw 192 lawmakers voting in favor, far surpassing the 151 votes needed for approval. This marked the first time in South Korea’s history that an acting president had faced such a motion. In response, lawmakers from Han’s ruling People Power Party (PPP) protested the process, with some even boycotting the vote.
Han’s suspension is now imminent, but his position remains uncertain pending the Constitutional Court’s decision, which could take up to 180 days. Meanwhile, Finance Minister Choi has stepped in as the country’s interim leader.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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