South Korean Won Pauses Gains

The South Korean won fell to around 1,450 per dollar, extending losses to more than a week low on renewed dollar strength and sustained capital outflows. Selling pressure on the won increased after the release of the latest Federal Reserve meeting minutes, which revealed a split among policymakers on the future path of US interest rates. Investors trimmed rate-cut expectations as the Fed signaled caution amid inflation and a robust labor market. Domestic investor sentiment also remained subdued despite verbal intervention from the Bank of Korea. The central bank noted that volatility in major domestic financial indicators has increased in recent weeks and pledged to step up monitoring of potential risk factors affecting the economy and financial markets. The comments were made during a market assessment meeting led by Deputy Governor Yoo Sang-dai following the three-day Lunar New Year holiday period.

The South Korean won edged down to around 1,444 per dollar, extending losses to an eight-month low on persistent capital outflows. In the first half of the year, the won has depreciated by over 8% against the US, largely due to foreign investors reducing their exposure to South Korean equities. Overseas investors sold about $180 million of local stocks in the latest session, extending their net outflows to a third consecutive day. In a recent development, the National Pension Service indicated it would adopt a more flexible approach to currency hedging as part of broader efforts to dampen excessive volatility. Market participants are closely watching whether the fund will actively sell dollars, and whether exporters’ year-end dollar conversions could provide some support for the won. Bank of Korea Governor Rhee Chang-yong also expressed concern, warning that the current exchange-rate level could negatively affect both inflation and economic growth.

The South Korean won fell to around 1,441 per dollar, easing after reaching a two-week high in the previous session, as renewed global risk aversion and firm dollar demand weighed on regional currencies. A tech-led selloff on Wall Street and safe-haven flows into US Treasuries curbed appetite for risk-sensitive assets, prompting traders to trim recent won positions ahead of key US economic data. The pullback came despite continued support from optimism surrounding the AI-driven semiconductor upcycle, with strong demand for high-bandwidth memory sustaining earnings prospects for major chipmakers and underpinning export momentum following early-February trade data showing robust gains. Near-term currency moves are being driven more by shifts in global sentiment and dollar momentum than domestic fundamentals.