South Korean Won Remains Under Pressure

The South Korean won weakened to around 1,538 per dollar, remaining under pressure as the US dollar stayed firm. Markets continued to price in the possibility of further Fed tightening, while investors awaited key US inflation data later this week for additional clues on the interest-rate path. Higher US yields continued to support dollar-denominated assets, reducing the appeal of emerging Asian currencies and contributing to broader strength in the greenback. The won also faced headwinds from renewed Middle East uncertainty, with oil prices rising amid ongoing US-Iran negotiations and concerns over potential disruptions to energy supplies through the Strait of Hormuz. Meanwhile, South Korea’s exports surged 60.4% year-on-year in the first 20 days of June, driven by robust semiconductor shipments amid strong global AI-related demand. This supported expectations of continued foreign-currency inflows from overseas sales.

The South Korean won weakened to around 1,538 per dollar, reversing sharply from its recent advance near 1,508, as the dollar remained firm following the Federal Reserve’s policy decision. The Fed kept rates unchanged but signaled a higher policy path than previously projected, reinforcing expectations of tighter financial conditions and supporting broad-based USD demand. The won also came under pressure from ongoing portfolio rebalancing flows and steady demand for the US currency across regional markets. Meanwhile, expectations that the Bank of Korea could maintain a tighter policy stance for longer helped limit downside pressure on the won. The central bank said inflation is likely to remain above target through next year, while policymakers warned that higher energy costs and exchange-rate pass-through effects could continue to fuel price pressures. Authorities’ continued monitoring of foreign exchange volatility also reassured markets.

The South Korean won strengthened to around 1,508 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 supporting broader financial stability. Oil prices fell sharply on the news, easing inflation pressures and improving South Korea’s external cost outlook. 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 in Seoul further underpinned risk-on flows. In addition, recent discussions between South Korean and US officials on foreign-exchange market conditions signaled closer monitoring of recent volatility.