The South Korean won weakened beyond 1,517 per dollar, nearing the more than 17-year low of around 1,520 touched on May 22, as renewed tensions in the Middle East pushed oil prices higher and bolstered demand for the US dollar. Investor sentiment turned cautious following reports that Iran had suspended negotiations with the US, heightening concerns over further disruptions to global energy supplies. Higher crude prices pose a particular risk to South Korea’s trade balance, given its heavy reliance on energy imports. The won also remained under pressure amid broader risk aversion across regional markets.
At the same time, South Korea’s annual inflation rate accelerated to 3.1% in May, the fastest pace in more than two years, strengthening expectations that the Bank of Korea could move toward an interest rate hike as early as July. The currency found some support from ongoing optimism about the country’s semiconductor industry, following Nvidia’s unveiling of a new AI-focused chip and its discussions with SK Group on cooperation in AI memory.
