South Korean Won Nears Weakest Level Since 2009

The South Korean won traded around 1,390 per dollar, remaining near its strongest level since late September 2025, as a softer US dollar supported demand for the local currency. The dollar index remained near multi-month lows as Treasury yields eased from recent highs, while investors scaled back expectations for further Fed rate hikes following softer US economic data, narrowing the dollar's yield advantage. Additionally, persistent dollar-selling flows from Korean exporters continued to support the won amid strong semiconductor-related export receipts. The conversion of SK hynix's ADR proceeds into won has also been a key factor behind the currency's sharp appreciation in recent weeks, boosting domestic dollar supply. Meanwhile, higher oil prices near three-week highs and renewed US-Iran tensions could pose a headwind for the won, as the lack of progress in peace efforts raises concerns over potential disruptions to Middle Eastern oil supplies and higher import costs for South Korea.

The South Korean won rose toward 1,408 per dollar, nearing a more than ten-month high, as expectations for further Federal Reserve tightening remained subdued. Weaker US retail sales and consumer sentiment, alongside contained inflation, reinforced expectations that the Fed could keep rates unchanged in September and weighed on the dollar. Additionally, persistent dollar-selling flows and renewed foreign demand for Korean assets have supported the won. The conversion of SK hynix’s ADR proceeds into won was a key factor behind its sharp appreciation in recent weeks, while foreign investors’ return to Korean equities has continued to bolster demand for the local currency. Meanwhile, renewed US-Iran tensions and higher oil prices could raise South Korea’s import costs and weigh on its trade balance amid oil supply concerns. Unresolved US-Korea trade issues, including negotiations over a $200 billion investment plan and continued US tariff pressure, could also pose a headwind for the won.

The South Korean won traded around 1,415 per dollar, remaining near a more than ten-month high, supported by persistent dollar-selling flows. The currency continued to benefit from the conversion of SK hynix's ADR proceeds into won, which has been a key factor behind its sharp appreciation in recent weeks. Expectations for further Bank of Korea rate hikes are also strengthening the currency's fundamental outlook, after BOK Deputy Governor Ryoo Sang-dai said stronger growth and persistent core inflation could warrant further tightening. Separately, reduced expectations for a September Federal Reserve rate hike are easing pressure from the dollar, with markets lowering the probability of a September hike to around 40% from 50%. Meanwhile, uncertainty over the reopening of the Strait of Hormuz remains a risk to the currency, with elevated oil prices raising concerns over Korea's energy import costs and inflation.