South Korean Won Weakens to 2009 Low

The South Korean won fell to around 1,540 per dollar, marking its weakest level since March 2009, as heightened Middle East tensions weighed on broader risk sentiment. Developments in Lebanon, including Hezbollah’s rejection of a ceasefire proposal, alongside continued Israeli military activity, kept concerns over potential disruptions to regional energy supply routes in focus. Safe-haven demand for the US dollar also strengthened amid the broader risk-off environment. Additional pressure came from a sharp equity selloff in Korea, with the KOSPI heading for its steepest weekly drop in over two months amid a global semiconductor downturn, prompting continued foreign fund outflows. Meanwhile, authorities said they were taking "extra vigilance" over volatility in financial and foreign exchange markets. At the same time, South Korea posted its second-largest current account surplus on record in April at $28.29 billion, supported by robust semiconductor exports.

The South Korean won crossed 1,500 per US dollar, touching its weakest level since March 2009, despite government pledges to curb excessive volatility. The decline highlights the pressure on Asian currencies as the Iran war persists, with higher oil prices and stalled peace talks driving capital reallocation. External factors, including a sharp rally in domestic stocks prompting foreign investors to rebalance portfolios, have also weighed on the won. Meanwhile, data this week showed South Korea’s inflation rate surged in May to its highest level in over two years, while exports grew more than expected to a record $87.75 billion, fueled by a global AI investment boom that pushed chip sales to new highs. Finance Minister Koo Yun-cheol stated that authorities are closely monitoring FX markets "with a high degree of vigilance to prevent anxiety from spreading" and vowed to take "prompt, necessary measures" in case of excessive market moves. The won has lost over 6% of its value this year.

The South Korean Won touched 1539.00 against the USD, the lowest since March 2009. Over the past 4 weeks, US Dollar South Korean Won gained 4.75%, and in the last 12 months, it increased 13.52%.