South Korea’s currency and its stock market will take center stage on Monday, as investors respond to a weekend vote to impeach President Yoon Suk Yeol following his attempt to impose martial law.

The Korean won will be the main focus for traders, after its heavy losses during the country’s recent political chaos. The currency has lost more than 2% against the greenback since President Yoon stunned markets on Dec. 3 by imposing — and quickly reversing — martial law. The won ended Friday’s session at 1,435.45 per dollar.

“The impeachment bill’s passage will imply that the worst is over for the won in terms of political uncertainty, and markets will finally be able to gauge the direction of the currency,” So Jaeyong, an economist at Shinhan Bank Co., said before the vote took place. “It will help put a cap on the won’s losses at around 1,444 per dollar,” he added.

The country’s stock market has already erased most of its losses triggered by the martial law incident. The benchmark Kospi Index rose 2.7% last week as investors priced in Yoon’s likely removal. 

The performance of Korean markets on Monday will offer a sign of how confident investors are following a political drama which appears to be reaching its end — but which is not quite over yet. The impeachment vote requires approval from Korea’s Constitutional Court, which has 180 days to make its decision and could reinstate Yoon if it decides the impeachment isn’t valid. Court approval would trigger a presidential election within 60 days. 

South Korea’s central bank vowed on Sunday to stabilize financial markets, adding that it expected markets to become less volatile in the wake of the vote.

The won plunged against the dollar in the immediate aftermath of martial law. Policymakers responded quickly, vowing to mobilize all possible measures to stabilize markets, but the won has remained fragile since then. The currency briefly dipped when a local newspaper reported that Yoon was considering reimposing martial law, and dropped again after parliament failed to pass an earlier impeachment bill.

South Korea’s three-year bond futures have fallen 16 ticks since Dec. 2 to 106.78 as of Friday, while its 10-year bond futures have dropped 77 ticks to 119.25 over the same period.

  - Bloomberg