South Korean Won Extends Losses on US-Iran Risks

The South Korean won weakened to around 1,507 per dollar, extending losses from the previous session amid lingering uncertainty surrounding US-Iran negotiations and higher oil prices. US President Donald Trump said he was in no hurry to finalize a deal with Iran, despite earlier expectations that an agreement could be reached soon, while disagreements over nuclear terms and the reopening of the Strait of Hormuz continued to cloud the outlook. Rising crude prices added pressure on the won, given South Korea's heavy reliance on energy imports. However, losses were tempered by strong export fundamentals, with South Korea's outbound shipments surging 53% year-on-year to a record $87.8 billion in May, driven by a 169% jump in semiconductor exports. Additionally, the KOSPI climbed to a fresh record high amid continued optimism surrounding AI-related investment and technology demand, helping improve risk appetite.

The South Korean won weakened to around 1,505 per dollar, extending losses from the previous session. Investors continued to weigh South Korea’s slowing domestic economy and persistent capital outflows despite improving global risk sentiment tied to easing Middle East tensions. Market optimism strengthened after reports indicated that the United States and Iran were moving toward extending their ceasefire arrangement for 60 days while resuming negotiations over Tehran’s nuclear program. Oil prices also eased, with Brent crude falling about 0.4% to near $93 per barrel. At the same time, the US dollar weakened broadly against major developed-market currencies, while Treasury yields declined across the curve during the previous session. Markets also monitored the government’s new reshoring initiative aimed at encouraging overseas Korean firms to return home through broader incentives and more flexible subsidy support for strategic industries.

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.