South Korean Won Gains on US-Iran Deal Hopes

The South Korean won strengthened to around 1,510 per dollar, recovering after touching its weakest level since March 2009 near 1,520, as easing geopolitical tensions boosted appetite for risk-sensitive Asian assets. Sentiment improved after signs of progress in US-Iran negotiations fueled expectations that the Strait of Hormuz could reopen, helping crude oil prices tumble more than 4% and easing concerns over global energy supply disruptions and inflation pressures. Additional support for the won came from continued optimism surrounding South Korea’s semiconductor sector, with strong AI-driven demand, record KOSPI trading activity, and robust chip exports reinforcing confidence in the country’s export outlook. Investor sentiment was also lifted by plans to allow foreign investors to trade South Korean ETFs directly, a move expected to support additional overseas capital inflows into local financial markets.

The South Korean won fell to around 1,520 per dollar, marking its weakest level since March 2009, as persistent capital outflows and a firm US dollar continued to weigh on sentiment. The currency remained sensitive to oil-linked risk sentiment, with cautious optimism over US–Iran talks easing immediate tail risks but leaving uncertainty over energy flows through the Strait of Hormuz. At the same time, ongoing foreign selling of South Korean equities and rebalancing out of large-cap semiconductor names continued to drive FX outflows, limiting the won’s ability to benefit from improved risk appetite. Broad US dollar strength alongside wide US Korea rate differentials further reinforced upward pressure on USD KRW, while defensive foreign positioning and the equity FX disconnect driven by concentrated gains in a handful of chip stocks without corresponding inflows into broader Korean assets continued to cap KRW recovery.

The South Korean won traded around 1,510 per dollar, extending losses to a more than one-month low, amid a firm dollar and elevated US yields. The greenback remained supported by rising US Treasury yields, as markets reassessed expectations that the Federal Reserve will keep policy restrictive for longer amid still-elevated inflation pressures. While US President Donald Trump’s comments that negotiations with Iran were in the “final stages” briefly improved risk sentiment, the impact on the won was limited. Elevated oil prices continued to reinforce inflation concerns and support USD demand through higher import costs. The currency also remained under pressure from sustained foreign portfolio outflows, financial market volatility, and cautious positioning, reflecting ongoing sensitivity to global liquidity conditions. Meanwhile, South Korea will begin 24-hour dollar–won spot trading from July 6 as part of efforts to open up its foreign exchange market.