A bank manager checks 50,000 won banknotes at the headquarters of Hana Bank in Seoul, in this Sept. 25, 2023 photo. Newsis

The Korean won experienced one of its steepest depreciations globally in December 2024, driven by political turmoil following the short-lived imposition of martial law, according to data released Sunday.

According to the data from the Bank for International Settlements (BIS), the Korean local currency's real effective exchange rate (REER) reached 91.3 at the end of December, down 1.99 points from a month earlier.

REER measures the strength of a currency relative to a basket of other currencies, adjusted for inflation.

A reading below 100 indicates depreciation compared to the base year, while a reading above the benchmark means the opposite.

Among the 64 BIS-listed countries, Korea's December REER was the second-lowest, trailing only Japan's 71.3.

The monthly decline of 1.99 points was also the third fastest globally, following Brazil's 3.94-point drop and Australia's 2.37-point decline.

This marked Korea's largest monthly REER loss in over two years, since a 2.92-point plunge in September 2022 during the Legoland debt default crisis that triggered a corporate bond yield spike and credit crunch concerns.

The won, which hovered around 1,370 won per U.S. dollar in November, increased to 1,442 won on Dec. 3 after President Yoon Suk Yeol declared martial law.

The currency further weakened to 1,486.7 won by Dec. 27 as political instability persisted (the won is quoted as a reverse ratio to the dollar).

"Political changes sparked by the martial law imposition have greatly affected the foreign exchange market," Bank of Korea Gov. Rhee Chang-yong said at a January press conference. "The won-dollar exchange rate is higher than what we can expect based on our economic fundamentals and the rate gap with the United States." (Yonhap)