SK Won Recovers Amid Market Stabilization Efforts

The South Korean won fell below 1,500 per dollar, extending losses to its weakest level since early 2009, as surging oil prices and broad risk-off sentiment continued to pressure the currency. Crude prices jumped above $100 per barrel, with West Texas Intermediate and Brent Crude rallying sharply after escalating conflict in the Middle East raised fears of supply disruptions and shipping risks through the Strait of Hormuz. The spike in oil intensified pressure on the won, given South Korea’s heavy reliance on imported energy, which heightens concerns about rising import costs, inflation, and a potential deterioration in the trade balance. President Lee said fuel prices would be capped to curb economic impact. At the same time, the dollar demand strengthened as investors moved toward safer assets, amplifying losses in regional currencies. The KOSPI also plunged and briefly triggered trading curbs, while foreign investors continued to sell Korean equities amid the growing uncertainty.

The South Korean won strengthened to around 1,474 per dollar on Friday, gaining traction after stabilizing for two consecutive sessions as the government moved to reassure global investors. In Hong Kong, officials from the Ministry of Economy and Finance highlighted Korea’s strong fundamentals, ample FX reserves, and energy stockpiles. They also announced plans to expand the foreign exchange market toward near 24-hour trading, a move designed to improve accessibility for foreign investors. Adding to the positive sentiment, investors digested a series of key economic data releases. Consumer prices rose 2% year-on-year in February, matching the Bank of Korea’s target and marking the sixth consecutive month at or above 2%. South Korea also reported a fifth-largest monthly current account surplus on record in January, totaling $13.26 billion. The surplus surged 397.4% year-on-year and marks the country’s 33rd consecutive month of surpluses.

The South Korean won steadied around 1,481 per dollar, halting a sharp selloff in the previous session that had driven it to a 17-year low, as authorities acted swiftly to curb market volatility amid escalating tensions in the Middle East. The stabilization followed President Lee Jae Myung’s directive to implement a KRW 100 trillion financial stabilization package during an extraordinary Cabinet meeting in Seoul. The session was called in response to last weekend’s US–Israeli strikes on Iran, which have intensified geopolitical risks. The package aims to support liquidity, stabilize markets, and ease immediate depreciation pressure on the won amid rising oil prices and a stronger dollar. Further lifting sentiment, South Korea’s foreign reserves rose for the first time in three months, reaching $427.62 billion at the end of February, driven by investment returns and the issuance of foreign currency-denominated Exchange Stabilization Fund bonds.