South Korea Unveils Tax Measures To Support Markets And Stabilise Currency

South Korea announced a new set of tax incentives aimed at stabilising financial markets and curbing recent weakness in the won, as authorities moved to counter growing capital outflows and rising volatility across Asian assets.

The measures include temporary tax relief for domestic equity investors, incentives for long-term shareholding, and steps designed to attract foreign capital back into Korean markets. Policymakers framed the package as a defensive response to global tightening conditions and slowing external demand, rather than a stimulus aimed at boosting speculative activity.

Markets reacted cautiously but positively. Korean equities pared earlier losses following the announcement, while the won stabilised after several sessions of sustained pressure driven by a stronger U.S. dollar and rising global risk aversion. Export-heavy sectors, particularly technology and manufacturing, saw modest relief as currency volatility eased.

The policy move highlights growing concern among Asian governments about spillover effects from U.S. monetary policy, slower Chinese growth, and fading global liquidity. South Korea’s export-oriented economy remains highly sensitive to shifts in global demand and capital flows, making currency stability a key policy priority.

In regional markets, the announcement had limited but notable impact. Other Asian currencies traded firmer on the session, while risk sentiment improved slightly across emerging Asia. However, investors remain cautious, viewing the measures as a short-term stabilisation effort rather than a structural fix.

For traders, South Korea’s intervention underscores a broader theme emerging into year-end: governments are increasingly willing to use fiscal and regulatory tools to defend markets as global growth momentum slows. Currency volatility and policy divergence across Asia are likely to remain key drivers into early 2026.