FX.co ★ SK Won Falls on Softer Exports, PMI Weakness

The South Korean won depreciated to approximately 1,392 per dollar on Monday, a decline from the previous week's steady levels, as weaker trade figures affected market sentiment. According to customs data, South Korea's merchandise exports rose by 1.3% year-on-year in August, amounting to $58.40 billion. This increase fell short of the anticipated 3.0% growth and marked a slowdown from July's 5.9% rise. The export shortfall was primarily attributed to a significant drop in shipments to the United States, marking the steepest decline since the COVID-19 pandemic era due to increased tariffs. Concurrently, manufacturing activity contracted for the seventh consecutive month, with the S&P Global manufacturing PMI registering 48.3 in contrast to July’s 48.0, remaining below the 50-point mark that indicates expansion. This contraction is consistent with warnings from the Bank of Korea about a "significant shock" to the economy, which is heavily dependent on exports to the U.S. The central bank predicts that tariffs will reduce economic growth in 2025 and 2026 by 0.45 and 0.60 percentage points, respectively, with forecasts at 0.9% and 1.6%.