South Korean Won Extends Gains on US-Iran Deal

The South Korean won strengthened to around 1,511 per dollar, extending its recovery after touching its weakest level since March 2009 near 1,560, as global demand for safe-haven assets eased following progress toward a US-Iran agreement. Washington and Tehran reached a framework aimed at ending their monthslong confrontation and restoring passage through the Strait of Hormuz, reducing tail-risk concerns around energy flows and helping stabilize broader financial conditions. The shift in sentiment weighed on the US dollar and supported risk-sensitive Asian currencies, with the won among the better performers, while a sharp equity rally, including a more than 5% rise in South Korea’s KOSPI, further reinforced positive sentiment. In addition, recent discussions between South Korean and US officials on foreign-exchange market conditions signaled closer monitoring of recent volatility.

The South Korean won weakened to around 1,520 per dollar, reversing from levels near 1,516 in the previous session amid persistent foreign-exchange flow pressures. Overseas investors extended their selling streak in local equities, even as domestic retail participation continued to support the stock market. Authorities stepped up oversight of non-deliverable forward trading and reiterated calls for exporters to promptly convert overseas earnings into won to support dollar supply conditions. Policymakers also maintained close monitoring of major banks and reaffirmed measures aimed at curbing excessive speculation and stabilizing the foreign-exchange market. Meanwhile, sentiment showed improvement following renewed hopes of a US-Iran agreement after President Trump said the US was nearing a deal and had called off planned military strikes. BOK rate hike expectations, reinforced by Governor Shin Hyun-song’s tightening remarks, also provided some offsetting support.

The South Korean won traded near 1,516 per dollar, extending gains from the previous session, as authorities stepped up efforts to stabilize the foreign exchange market. The Bank of Korea and the Financial Supervisory Service launched joint inspections of major foreign-exchange banks for the first time in 14 years, following recent warnings against excessive volatility and speculative trading. Authorities said the inspections would examine whether market participants engaged in activities that destabilized the foreign exchange market or sought to secure improper gains by influencing exchange rates. The currency also continued to recover after sliding to its weakest level since 2009 last week, as traders unwound bearish positions following recent stabilization measures. However, gains were limited by escalating tensions between the US and Iran, raising concerns over disruptions to shipping through the Strait of Hormuz, boosting demand for the US dollar and pushing oil prices higher.