South Korean Won Falls on Risk-Off Flows

The South Korean won weakened to around 1,487 per dollar, extending losses from the previous session, as global sentiment deteriorated following renewed geopolitical tensions in the Middle East. The move came after US–Iran talks ended without agreement, followed by Washington’s decision to impose a naval blockade on Iranian ports. The escalation heightened concerns over a prolonged conflict and supported safe-haven demand for the US dollar. At the same time, crude prices rose above $100 per barrel, adding pressure on the currency through higher import costs for energy. As a major energy importer, South Korea remains highly sensitive to oil price swings. Foreign selling in local equities added to capital outflow pressure, while weaker risk appetite across global markets also weighed on the won. On the domestic front, authorities are seeking to stabilise energy supply and diversify crude imports, including sourcing from Kazakhstan and the United States.

The South Korean won traded near 1,485 per dollar and remained on course for a weekly gain of nearly 2%, underpinned by improved regional risk sentiment despite lingering geopolitical and energy-related headwinds. Markets continued to assess a fragile de-escalation as the Strait of Hormuz remained only partially reopened, while South Korean equities posted their strongest weekly performance in over 17 years, reinforcing broader risk appetite. The Bank of Korea’s decision to hold rates at 2.5% also helped anchor policy expectations. Meanwhile, gains were capped by elevated oil prices near $100 per barrel and ongoing shipping disruptions, which kept import-cost and inflation pressures elevated. Around 26 South Korean vessels remain stranded in the region, with Seoul preparing to dispatch a special envoy to Iran. At the same time, foreign flows were uneven, as equity inflows provided partial support but did not fully translate into sustained demand for the currency.

The South Korean won hovered around 1,480 per dollar, edging lower from a four-week high in the previous session amid lingering doubts over the tentative US-Iran ceasefire. Investor caution persisted as both sides have disputed aspects of the agreement, and the Strait of Hormuz has yet to fully reopen, leaving the ceasefire’s durability in question. Meanwhile, overseas inflows into Korean equities have continued, providing support to the currency, while softer oil prices are easing cost pressures for South Korea’s import-dependent economy. Domestic fundamentals remain strong, with February’s current account posting a record surplus of $23.19 billion, led by semiconductor exports. Strategists noted that if foreign inflows persist and geopolitical risks remain contained, the won could trend toward 1,450–1,420 this quarter, though renewed tensions could quickly reverse the move.