South Korean Won Eases from Over 1-Month High

The South Korean won eased to around 1,480 per dollar, retreating from its strongest level since March, as foreign equity outflows and cautious global risk sentiment weighed on the currency. South Korea recorded renewed foreign selling of KRW 376.6 billion in local equities, which offset recent stabilisation after a sharp $23.8 billion outflow in March, reinforcing near-term dollar demand and limiting further gains. At the same time, geopolitical uncertainty in the Middle East lingered, with US–Iran negotiations still ongoing and no firm agreement in place, while elevated oil prices continued to pressure South Korea’s economy given its heavy reliance on energy imports. Moreover, domestic sentiment softened further, with consumer confidence falling to its lowest since May 2025, while both manufacturing and financial conditions remained subdued, highlighting cautious investor sentiment and leaving limited support for capital inflows.

The South Korean won strengthened to around 1,470 per dollar, remaining near its strongest level since March, amid easing oil prices and domestic policy expectations. Reports that the United States and Iran are considering further negotiations supported expectations that diplomatic channels remain open and eased concerns over Middle East supply disruptions, contributing to lower crude prices. This helped relieve imported inflation pressures in South Korea. Import price data showed a 16.1% month-on-month surge in March, the sharpest rise in nearly three decades, driven by higher oil prices and a weaker won, highlighting the scale of external cost pressures. The increase underscored Korea’s sensitivity to global energy shocks given its heavy reliance on imported crude. Bank of Korea governor nominee Shin Hyun-song signaled that persistent inflation pressures may warrant a policy response and warned against excessive won weakness, reinforcing expectations of closer FX monitoring.

The South Korean won hovered around 1,475 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.