Bank of Korea to Bolster Market Liquidity Amid Political Turmoil.

Seoul: The monetary policy board of the Bank of Korea (BOK) announced on Wednesday its commitment to inject "ample liquidity" into the market through repurchase agreements and other measures. This decision comes as a strategic move to mitigate the financial and foreign exchange market instability triggered by recent political events.According to Yonhap News Agency, the BOK's board convened an extraordinary session led by Governor Rhee Chang-yong to address the market turbulence that followed President Yoon Suk Yeol's unexpected declaration of martial law, which was subsequently revoked. The central bank has pledged to temporarily enhance short-term liquidity, starting with the acquisition of repurchase agreements, to stabilize the affected markets.A repurchase agreement, commonly known as a repo, is a financial arrangement in which one party sells a security to another party at an agreed price while committing to repurchase the same security at a specified future date. This mechanism is intended to provid e immediate liquidity to the market.In addition to repurchase agreements, the BOK is prepared to extend loans as needed and plans to implement various other measures to steady the exchange rate. The central bank expressed confidence in the country's economic fundamentals and financial resilience but stated its readiness to monitor the situation closely and deploy further measures if necessary.The financial landscape was rocked by President Yoon's declaration of martial law, made during a late-night address on Tuesday, in which he accused opposition factions of engaging in "anti-state activities." The martial law was lifted shortly after the National Assembly unanimously voted against it. This political upheaval has led to significant volatility in the foreign exchange market, with the Korean won dropping to its lowest value in over two years against the U.S. dollar.In the wake of these developments, financial authorities have vowed to utilize all available tools to stabilize the market, including the pr ovision of unlimited liquidity. As of 3:30 p.m., the Korean won was trading at 1,410.1 won per U.S. dollar, a decline of 7.2 won from the prior session.