Won Strengthens on Government FX Measures

The South Korean won weakened to around 1,515 per dollar, moving closer to its multi-year low near 1,516 touched in March, as persistent capital outflows and a firm US dollar continued to weigh on sentiment. The currency remained sensitive to oil-linked risk sentiment, with cautious optimism over US–Iran talks easing immediate tail risks but leaving uncertainty over energy flows through the Strait of Hormuz. At the same time, ongoing foreign selling of South Korean equities and rebalancing out of large-cap semiconductor names continued to drive FX outflows, limiting the won’s ability to benefit from improved risk appetite. Broad US dollar strength alongside wide US Korea rate differentials further reinforced upward pressure on USD KRW, while defensive foreign positioning and the equity FX disconnect driven by concentrated gains in a handful of chip stocks without corresponding inflows into broader Korean assets continued to cap KRW recovery.

The South Korean won traded around 1,510 per dollar, extending losses to a more than one-month low, amid a firm dollar and elevated US yields. The greenback remained supported by rising US Treasury yields, as markets reassessed expectations that the Federal Reserve will keep policy restrictive for longer amid still-elevated inflation pressures. While US President Donald Trump’s comments that negotiations with Iran were in the “final stages” briefly improved risk sentiment, the impact on the won was limited. Elevated oil prices continued to reinforce inflation concerns and support USD demand through higher import costs. The currency also remained under pressure from sustained foreign portfolio outflows, financial market volatility, and cautious positioning, reflecting ongoing sensitivity to global liquidity conditions. Meanwhile, South Korea will begin 24-hour dollar–won spot trading from July 6 as part of efforts to open up its foreign exchange market.

The South Korean won weakened past 1,500 per dollar, extending losses to its lowest level in over a month, amid renewed risk-off sentiment and a stronger dollar. US President Donald Trump signaled reduced patience in the ongoing standoff with Iran, heightening concerns over potential escalation and keeping Strait of Hormuz supply risks in focus. This triggered broader risk-off in regional equities, with equity weakness and foreign fund outflows adding pressure on the currency. Oil prices were also supported, raising South Korea’s energy import costs given its reliance on imported crude and commodities. At the same time, broader dollar strength, supported by firmer US yields and sustained policy uncertainty, continued to limit recovery in the won. Market attention also remained on discussions between Seoul and Washington regarding a potential currency swap arrangement, seen as a longer-term stabilizing factor for FX volatility, though no concrete progress has been confirmed.