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BANGALURU: South Korean shares fell and the won stabilized on Wednesday, after plunging overnight as the political turmoil in the wake of President Yoon Suk Yeol’s reversal of martial law declaration dented sentiment, while other Asian markets were largely steady.

The won surged 0.7% by 0356 GMT, bolstered by suspected central bank intervention and the finance ministry’s pledge of “unlimited” liquidity support to markets.

The initial declaration pushed the local currency to a two-year low against the US dollar, dropping as much as 2% at one point — its steepest single-day decline since early November 2016, cementing the local unit as the worst-performing currency so far this year, down 9%.

Fears of US tariffs and an unexpected interest rate cut by the Bank of Korea coincided with a 14-month export slump in the country, reflecting growing concerns about trade tensions and weakened US demand, all taking the shine off the country’s assets.

Benchmark Kospi index, down as much as 2.3%, also stands out as one of Asia’s poorest-performing equity markets this year.

“We believe outflow pressures will increase and pose an upside risk to USD/KRW, especially as positioning had lightened up recently. Once the dust settles, the policymakers will likely want to step up fiscal, in our view,” analysts at Citi said in a note.

Meanwhile, the US dollar index, which measures the greenback against six major counterparts, was marginally up by 0.1% at 106.42 as traders pondered the chances of a Federal Reserve interest-rate cut this month.

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