South Korean Won Drops to 17-Year Low

The South Korean won weakened past 1,510 per dollar, extending losses to its weakest level since March 2009, amid heightened global risk aversion linked to escalating tensions in the Middle East. The market reacted to missile attacks by Yemen’s Houthi forces on Israel over the weekend, prompting broad foreign outflows from Asian currencies. Rising oil prices, now above $100 per barrel, added further pressure on the won, stoking concerns over inflation and South Korea’s energy-dependent economy. Short-term liquidity flows also contributed to volatility, with non-resident investors reducing exposure to local bonds and equities. The won’s depreciation mirrored weakness in other regional currencies, though technical support near 1,500 could help limit further declines. National Pension Service CEO Kim Sung-joo added that the won’s prolonged weakness may require intervention, citing a more appropriate equilibrium in the low 1,400s.

The South Korean won weakened past 1,505 per dollar, extending losses near its weakest level since March 2009, as persistent Middle East tensions continued to weigh on market sentiment. Conflicting messages between the United States and Iran clouded prospects for a near-term ceasefire, as Washington signaled progress in talks while Tehran denied negotiations, prolonging uncertainty. At the same time, disruptions around the Strait of Hormuz kept global oil prices high and crude and LNG supply risks elevated, straining Korea’s energy-dependent economy. The Bank of Korea warned that the conflict could amplify inflation, slow growth, and heighten foreign exchange volatility, signaling policy caution and suggesting rates may remain at 2.50% at least through August. Foreign investor outflows and rising bond yields further reflected cautious sentiment, while the United States is advancing plans to raise global tariffs, adding trade uncertainty for South Korea’s export-driven economy.

The South Korean won hovered around 1,500 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.