South Korean Won Plummets to Near 17-Year Low Amid Global Tensions

The South Korean won continued its sharp decline against the U.S. dollar, closing at 1529.7 won on Tuesday, marking its highest point since March 31st and approaching levels not seen since the 2009 global financial crisis. Despite interventions by foreign exchange authorities, the downward trend persists, fueled by a confluence of negative global and domestic factors.

The currency's depreciation is driven by escalating geopolitical tensions, particularly the conflict between the U.S. and Iran, which typically prompts a flight to safety in the dollar. This is compounded by foreign investors divesting from South Korean stocks, further pressuring the won. Adding to the economic uncertainty, the U.S. Trade Representative's Office announced additional tariffs, creating further headwinds for the export-reliant South Korean economy.

The won opened at 1530.0 won and briefly touched 1530.8 won during trading, levels not sustained since March 31st. The last time the exchange rate opened above 1530.0 won was on March 10, 2009, when it reached 1554.0 won, highlighting the current situation's severity.

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We are maintaining a high level of vigilance and closely watching the situation in the face of high external uncertainty to prevent the spread of anxious sentiment. We will take immediate necessary measures against excessive쏠림 (imbalanced market movements).

South Korean financial authorities are closely monitoring the market's volatility. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol convened a joint market monitoring meeting with the Governor of the Bank of Korea, the Chairman of the Financial Services Commission, and the Governor of the Financial Supervisory Service. "We are maintaining a high level of vigilance and closely watching the situation in the face of high external uncertainty to prevent the spread of anxious sentiment," Koo stated. "We will take immediate necessary measures against excessive쏠림 (imbalanced market movements)."

Participants at the meeting assessed that market volatility is widening due to the Middle East conflict and continued stock sales by foreign investors, despite a record-high current account surplus. They also identified the recent surge in the domestic stock market as a factor, leading foreign investors to rebalance their portfolios and realize profits, thereby increasing currency fluctuations.

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Market volatility is widening due to the Middle East conflict and continued stock sales by foreign investors, despite a record-high current account surplus.