Korean Won Holds Firm on Softer Dollar

The South Korean won held steady around 1,473 per dollar, retaining recent gains as sentiment improved on a softer dollar and easing oil prices. Market sentiment was influenced by developments surrounding tensions between the United States and Iran, where a fragile ceasefire has largely held despite continued political and military uncertainty. Ongoing discussions about potential peace negotiations have reduced immediate demand for the dollar as a defensive asset, even as risks remain elevated. Separately, sentiment was supported by strong trade data showing South Korea’s exports above $80 billion for a second consecutive month in April, driven by robust semiconductor shipments. The country also recorded a trade surplus above $20 billion for the second straight month, a first on record, despite ongoing global trade uncertainty and Middle East tensions.

The South Korean won gained 1.3% to around 1,485 per dollar in April, recovering from its weakest level in over a decade at around 1,500 seen in late March. The move was supported by a mild easing in the US dollar as risk sentiment improved following recent volatility, offering short-term relief for Asian currencies after earlier safe-haven demand. Broader regional risk appetite also firmed amid sustained optimism in global technology markets, supporting flows into export-reliant Asian economies such as South Korea. However, gains were partly capped by rising geopolitical tensions in the Middle East and a surge in oil prices toward $120 per barrel following the US-Iran standoff, which raised concerns over Korea’s energy import burden and inflation outlook. The Federal Reserve’s decision to hold rates steady while signaling elevated uncertainty also kept the US dollar supported, limiting further KRW appreciation.

The South Korean won weakened to around 1,485 per dollar after touching a one-week high, as investors remained cautious ahead of the US Federal Reserve policy decision and continued to price in elevated global energy costs. Risk sentiment was pressured by uneven performance in Asian equities and renewed caution around global technology valuations, supporting modest dollar demand and limiting appetite for risk-sensitive Asian currencies. At the same time, elevated crude prices, with Brent holding above $111 per barrel amid ongoing geopolitical uncertainty and supply-side disruption, added pressure through higher import cost expectations for Korea, reinforcing a weaker bias in the currency. This also kept concerns elevated over Korea’s external balance outlook, given its reliance on energy imports. Fed policy expectations remained largely steady, with markets fully pricing in a hold ahead of the meeting outcome and offering little offset to dollar strength in the near term.