SEOUL, Dec 4 — South Korea’s finance ministry said today it is ready to deploy "unlimited” liquidity into financial markets if needed after President Yoon Suk Yeol lifted a martial law declaration he imposed overnight that pushed the won to multi-year lows.

The announcement came after Finance Minister Choi Sang-mok and Bank of Korea Governor Rhee Chang-yong held emergency meetings overnight, and ahead of the BOK’s extraordinary meeting session abruptly scheduled for 9am local time (10am Malaysian time) today.

"All financial, FX markets as well as stock markets will operate normally,” the government said in a statement.

"We will inject unlimited liquidity into stocks, bonds, short-term money market as well as forex market for the time being until they are fully normalised.”

South Korea’s won trimmed some losses early today but stayed near two-year lows after Yoon lifted his shock martial law declaration, honouring a parliamentary vote against the measure.

South Korea’s parliament, with 190 of its 300 members present, unanimously passed a motion on Wednesday requiring the martial law be lifted.

US-listed South Korean stocks fell, while exchange-traded products in New York including iShares MSCI South Korea ETF and Franklin FTSE South Korea ETF lost about 1 per cent each.

The Korean won also fell sharply against the yen to the weakest since May 2023, down 2.5 per cent.

The political turmoil comes as Yoon and the opposition-controlled parliament clash over the budget and other measures.

The opposition Democratic Party last week cut 4.1 trillion won from the total budget proposal of 677.4 trillion won (RM2.14 trillion) the Yoon’s government submitted, putting the parliament in a deadlock over control of the 2025 annual budget.

The parliamentary speaker on Monday stopped the revised budget from going to a final vote.

A successful budget intervention by the opposition would deal a major blow to Yoon’s minority government and risk shrinking fiscal spending at a time when export growth is cooling.

"The negative impact to the economy and financial market could be short-lived as uncertainties on political and economic environment could be quickly mitigated on the back of proactive policy response,” Citi economist Kim Jin-wook said in a report. — Reuters