Intense disruption caused the markets to the unexpected announcement Donald Trump to impose dictatorial 25% in South Korean products, with Korean assets recording sharp losses and investors rushing to reduce their exposure to emerging markets.
Donald Trump’s initiative, which was unexpectedly announced via social media, is coming to intensify the already tense international environment, adding new commercial uncertainty to the global economy due to duties and affecting foreign exchange and stocks.
The first and most immediate reaction came from the monetary market, with Korean Won fell up to 1.1% against the dollar, reaching 1,378 won per dollar, the lowest level of the last two weeks. The depreciation reflects concern for possible export decline and the general destabilization of the country’s trade balance.
At the same time, the ETF Ishares MSCI South Korea (EWY), which is an index for the country’s overall stock market, also declined significantly. The electronic index has lost 3.6%losses, the highest daily decline since April, which reflects the massive risk aversion to investors.
Pressures in the emerging markets and
The Trump announcement did not only affect Korea. The threat to imposing duties in other developing countries has reinforced the alert climate. The key index of emerging coins fell 0.5%, the strongest daily decline in November 2024. The correction came to mitigate the impressive profits that had been made by the beginning of the year, as investors had turned to emerging economies.
Strengthening the dollar internationally has been reinforced by the assessment that duties would not seriously hit the US economy and that there are no immediate interest rate cuts from the Fed to offset the impact.