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Airlines hit by currency decline following South Korea’s brief imposition of martial law
December 6th 2024
South Korea’s airlines are suffering significant setbacks as a result of the national government’s short-lived imposition of martial law earlier this week. Read More » The value of the country’s currency, the won, is eroding and some major nations are categorizing South Korea as a travel risk, The Korea Times reports. “Even with the passage of the National Assembly’s resolution to lift martial law and its eventual repeal, heightened political instability in the country makes the depreciation of the won inevitable. In the aftermath of the emergency martial law amplifying risk aversion, exchange rate volatility is likely to remain high,” KB Kookmin Bank analyst, Lee Min-hyuck, told the newspaper. The high exchange rate is a direct hit for airlines as most of their fixed costs, particularly leasing fees and fuel expenses, are paid in US dollars. Hana Securities analyst Ahn Do-hyun said although martial law has been revoked some countries, including the UK and Israel, have issued travel warnings for South Korea while the U.S. and Japan have urged their citizens to exercise caution. “The high exchange rate in the 1,400 won range is likely to persist for the time being. It negatively affects airlines from both demand and cost perspectives,” he said.
