South Korean Won Remains Under Pressure

The South Korean won hovered around 1,485 per dollar, remaining near a one-month high, as investors reassessed the prospect of continued dialogue between the US and Iran. Markets have begun to price a partial de-escalation in US–Iran tensions, but uncertainty remains elevated as recent negotiations proved inconclusive and key flashpoints such as the Strait of Hormuz remain active risk factors. This keeps safe-haven demand for the US dollar broadly supported, limiting any meaningful KRW rebound. At the same time, oil prices, while off recent highs, remain elevated compared to pre-shock levels, sustaining Korea’s energy import burden and reinforcing structural demand for dollars. With no strong domestic catalyst from policy or capital inflows, the won continues to lack an independent support driver. Meanwhile, the dollar has only eased marginally, leaving KRW movements largely range-bound and sensitive to headline-driven shifts in global risk sentiment.

The South Korean won weakened to around 1,485 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.