South Korean Won Weakens on Risk-Off Flows

2026-05-28 03:45 By Erika Ordonez 1 min. read

The South Korean won weakened to around 1,510 per dollar, reversing gains from the previous session, pressured by a firmer US dollar as geopolitical uncertainty and rising oil prices.

Market sentiment was weighed by ongoing volatility around US-Iran negotiations, with President Donald Trump saying Washington remained “not satisfied” with talks, while conflicting reports on a possible reopening of the Strait of Hormuz added to uncertainty.

Brent crude’s move back toward $96 per barrel further pressured the won, given Korea’s high energy import dependence and sensitivity to external price shocks.

Meanwhile, domestic policy signals offered only partial offset, as the Bank of Korea kept its policy rate unchanged at 2.5% for an eighth straight meeting.

While the central bank upgraded its growth outlook on stronger semiconductor exports, it also flagged persistent inflation and currency weakness risks, reinforcing expectations for a cautious policy stance going forward.



News Stream
South Korean Won Weakens on Risk-Off Flows
The South Korean won weakened to around 1,510 per dollar, reversing gains from the previous session, pressured by a firmer US dollar as geopolitical uncertainty and rising oil prices. Market sentiment was weighed by ongoing volatility around US-Iran negotiations, with President Donald Trump saying Washington remained “not satisfied” with talks, while conflicting reports on a possible reopening of the Strait of Hormuz added to uncertainty. Brent crude’s move back toward $96 per barrel further pressured the won, given Korea’s high energy import dependence and sensitivity to external price shocks. Meanwhile, domestic policy signals offered only partial offset, as the Bank of Korea kept its policy rate unchanged at 2.5% for an eighth straight meeting. While the central bank upgraded its growth outlook on stronger semiconductor exports, it also flagged persistent inflation and currency weakness risks, reinforcing expectations for a cautious policy stance going forward.
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South Korean Won Rises on Tech Boost
The South Korean won strengthened to around 1,500 per dollar, rebounding after touching its weakest level since March 2009 near 1,520 on May 22, driven by improved risk appetite as a global AI-driven semiconductor rally boosted demand for Korean assets. Strong gains in technology shares helped lift the KOSPI to a fresh record high, reinforcing inflows into the local currency and supporting sentiment toward export-linked assets. Expectations that the Bank of Korea will maintain a hawkish tone at this week’s policy meeting also underpinned the won amid persistent inflation pressures and resilient economic growth. A state-run think tank raised South Korea’s 2026 outlook to 2.5%, citing robust semiconductor exports and AI-related investment. However, gains remained limited as investors continued to monitor developments in the Middle East, with renewed US military action against Iran keeping concerns over oil prices and imported inflation risks in focus.
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The South Korean won strengthened to around 1,500 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.
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