Mathews said the situation could have been “much worse” had the president not aborted his plan.
“Investors now ‘only’ have to worry about a period of significant political uncertainty,” he said.
The South Korean finance ministry and central bank looked to provide stability and reassure markets.
“As announced together with the government, it has been decided to temporarily supply sufficient liquidity until the financial and foreign exchange markets stabilise,” the Bank of Korea said.
It added that “the range of securities eligible for (repo) transactions and the target institutions will be expanded”.
Deputy Prime Minister Choi Sang-mok, who also holds the economy portfolio, said financial authorities will keep international partners informed about developments.
But Michael Wan at MUFG warned of remaining uncertainty, despite the measures to recover from the initial economic hit.”From a macro perspective, South Korea was already one of the more vulnerable countries to the impact of Trump’s proposed tariffs,” he said in a commentary.
“This recent development could raise some further risk premium on the currency at least until we get clarity on political stability,” he added.
The losses in Seoul came on a mixed day for Asia markets, with Tokyo, Singapore, Taipei, Mumbai and Jakarta rising but Shanghai, Sydney, Wellington, Bangkok and Manila falling. Hong Kong was marginally lower.
London fell at the open, while Frankfurt hit another fresh record after ending Tuesday above 20,000 for the first time.
Wall Street had provided a healthy lead, with the S&P 500 and Nasdaq hitting fresh records as investors try to assess the chances of the Federal Reserve slashing interest rates again this month.
Even Paris eked out gains despite the brewing political crisis in France, where opposition lawmakers vowed to topple the three-month-old minority government of Prime Minister Michel Barnier in a no-confidence vote owing to a budget standoff.
The euro remained wedged just above a 14-month low on concerns about the outlook for the eurozone’s number two economy.
Oil prices extended gains after surging around 2.5 per cent Tuesday on reports that major producers at the OPEC+ grouping were close to a deal to extend output limits.
