FX.co ★ South Korean Won Falls Amid Tariff and Tax Uncertainty

On Friday, the South Korean won depreciated to approximately 1,400 per dollar, marking its lowest level in over eleven weeks. This decline was driven by pressure stemming from US trade actions and apprehensions regarding domestic tax reforms. The US dollar remained strong following President Trump's reinforcement of a 10% baseline global tariff, with the potential for it to increase to 41% for non-trade partners. This escalation in trade tensions triggered a surge in safe-haven flows into the dollar. On the home front, investor sentiment was impacted negatively by the government's proposal to retract recent tax reductions, raising concerns about its dedication to market reforms and efforts to address the Korea Discount. Additionally, July's manufacturing PMI dropped to 48.0 from 48.7 in June, indicating a sixth consecutive month of contraction and reflecting a significant downturn in operating conditions due to declines in output and new orders. Companies also noted increased uncertainty stemming from US tariff risks. Although exports experienced a better-than-expected rise of 5.9%, propelled by strong semiconductor demand, worries over the broader industrial recovery overshadowed these gains.