South Korean markets plunged and finance officials scrambled to emergency policy meetings on March 12, 2004 after President Roh Moo-hyun was stripped of his executive powers in an unprecedented impeachment vote.
The country's KOSPI stock index tumbled 5.5 percent, recovering slightly to end the trading day down only 2.5 percent.
The U.S. dollar surged nearly 1 percent to 1,180 won, from the previous day's close of 1,169 won. The 3-year South Korean treasury yield plunged 10 basis points to 4.50 percent early in the session.
The parliamentary decision has fanned political turmoil in a country already weighed down by tensions with North Korea and a struggling economic recovery.
The opposition-backed impeachment motion had cited Roh's alleged mismanagement of the economy as a reason for trying to oust him after 13 months in office.
South Korea's economic growth rate slowed to 2.9 percent last year, from 6.3 percent in 2002.
The government is aiming for 5 percent growth this year, but poor domestic consumption and tensions about North Korea's nuclear crisis are burdening the economy.
After the impeachment vote, emergency policy meetings were called at South Korea's Ministry of Finance and Economy, the Financial Supervisory Service and the Bank of Korea.
However, Finance and Economy Minister Lee Hun-Jai said the crisis "doesn't mean there is a problem with our economy. We have so far established an economic system that is resistant toward political upheavals."
The Bank of Korea said that no immediate action was needed, but it was on standby to stabilize any market instability by increasing the money supply or intervening in exchange rates.
The credit agency Standard & Poor's Ratings Services said that the impeachment could have short-term negative impact on the economy, but that its ratings on the South Korea's sovereign debt remained unchanged.
"Although the current political crisis caused by the vote to impeach Korea's president could damage economic sentiment in the short term, there is no significant direct impact on the sovereign credit rating," said Takahira Ogawa, director of international public finance for Standard & Poor's in Singapore.
Mr. Roh's executive powers were frozen and the Constitutional Court has 180 days to rule on whether he should be officially unseated. (Associated Press)
to Daily News