South Korean Won Steadies on Ceasefire Hopes

The South Korean won hovered around 1,497 per dollar, holding broadly steady as improving risk sentiment followed signs of easing tensions in the Middle East. US President Donald Trump signaled progress in negotiations with Iran, raising optimism over a potential de-escalation in the conflict. The shift supported regional markets and tempered safe-haven demand for the dollar. However, gains in the won remained limited as underlying risks persisted. Ongoing disruptions to energy flows, including the constraints in the Strait of Hormuz and supply setbacks from QatarEnergy, continued to fuel concerns over elevated import costs and inflation in South Korea. Meanwhile, discussions around expanding foreign exchange hedging by the National Pension Service pointed to potential longer-term support for the currency, though near-term movements remained driven by geopolitical developments and oil price volatility.

The South Korean won fell just below 1,500 per dollar, staying under pressure amid ongoing uncertainty over US-Iran tensions. The currency remains highly sensitive to developments in the Middle East, as US threats of strikes on Iranian energy infrastructure and Iran’s warnings over regional energy routes maintain elevated safe-haven demand for the dollar. While oil prices eased slightly following news of delayed US strikes, continued volatility in crude markets weigh on the won, reflecting Korea’s heavy reliance on imported energy. Elevated energy costs and broader inflation concerns are reinforcing investor caution, limiting the won’s ability to sustain a meaningful recovery. Foreign flows also contribute to downward pressure, as investors remain hesitant amid risk-off sentiment in Asian markets. Market participants are monitoring both geopolitical developments and energy price trends closely.

The South Korean won fell past 1,500 per dollar, marking its weakest level since March 2009, as escalating US–Iran tensions rattled markets. The US set a 48-hour deadline for Tehran to reopen the Strait of Hormuz, warning that failure could trigger strikes on Iranian energy facilities, while Iran threatened regional energy and water infrastructure and said it could close the strait if attacked. Risk-off sentiment was compounded by foreign selling of local assets, with net outflows totaling 1.8 trillion won, keeping downward pressure on the currency. South Korea’s heavy reliance on energy imports amplifies the impact of oil price spikes, while broader Asian market weakness, including sharp losses in the KOSPI, further boosted safe-haven demand for the US dollar. The government and ruling party are preparing a 25 trillion-won supplementary budget to cushion the economy from rising energy costs and support vulnerable groups.