Seoul: The National Assembly on Tuesday passed a set of bills aimed at stabilizing the foreign exchange market and providing tax incentives to encourage local investors to return to the domestic stock market as the South Korean currency has plunged amid the Middle East conflict.

According to Yonhap News Agency, under the revised Act on Restriction on Special Cases Concerning Taxation, capital gains tax will be deducted for individual investors who invest their gains from overseas stocks in the domestic stock market for one year. This move is seen as a strategic effort to attract more local investment into South Korea's financial markets.

Investors who decide to sell foreign stocks to reinvest in the domestic market through the newly introduced "reshoring investment account" by May 31 will benefit from a full exemption from the capital gains tax. Those who sell before December 31 will be eligible for a 50 percent deduction. This initiative is designed to make domestic investments more appealing compared to foreign alternatives.

Additionally, the bill is crafted to offer tax benefits to retail investors when they purchase financial products that hedge against foreign exchange losses. This measure aims to provide more security for investors amid the volatile global economic environment.

With the U.S.-Israeli attacks on Iran entering their second month, global oil prices have surged, raising concerns about a severe blow to South Korea's export-dependent economy. The new legislative measures are part of a broader strategy to mitigate these economic risks and stabilize the national currency.