South Korean Won Remains Volatile

The South Korean won fluctuated around 1,470 per dollar, remaining highly volatile amid mounting uncertainties in the Middle East and sharp swings in oil prices. The won rallied on Monday as the dollar retreated after US President Donald Trump suggested the Iran conflict could be nearing its end, causing a drop in oil prices and easing inflation concerns. However, the won continued to face selling pressure from foreign investors and a firm dollar, while investors stayed cautious over geopolitical developments. Given South Korea’s heavy dependence on imported energy, fluctuations in crude prices continued to fuel concerns about rising import costs and inflation. Investors monitor policy responses after Finance Minister Koo Yun-cheol said the government could deploy all available tools, including a possible supplementary budget and measures to stabilize domestic fuel prices, aimed at cushioning the economic impact of Middle East tensions.

The South Korean won fell to around 1,490 per dollar, extending losses near its weakest level since 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.