The South Korean won weakened to around 1,498 per dollar, extending losses to its lowest level in more than a month, as persistent geopolitical tensions and a firmer US dollar hurt risk appetite. Comments from President Donald Trump that the ceasefire was on “massive life support” heightened fears of further escalation, keeping concerns over potential supply disruptions in the Strait of Hormuz in focus and underpinning oil prices. In turn, this intensified pressure on South Korea’s energy import bill, given its heavy dependence on imported crude and other commodities.
At the same time, stronger-than-expected US inflation data reinforced expectations that the Federal Reserve will keep interest rates elevated for longer, supporting dollar strength and widening yield differentials with Asian currencies, thereby further constraining any recovery in the won. Volatility in Korean equities also dampened sentiment, as foreign investors pared back exposure following sharp swings in the KOSPI. Rebalancing flows added to dollar demand, maintaining downward pressure on the currency.
