The South Korean Won (KRW) has fallen to its lowest level in 17 years, with the USD/KRW pair extending a five-day winning streak and trading around 1,540 after reaching 1,549 during Asian hours on Friday—a level last seen in March 2009 [1]. This sharp depreciation comes despite explicit pledges from South Korean government officials to curb excessive market volatility [1].
The KRW's weakness is attributed to ongoing geopolitical conflict involving Iran, which has led to surging oil prices and stalled peace talks, prompting global capital reallocation [1]. South Korea's central bank has signaled an imminent shift toward a more restrictive monetary policy stance to address rising inflation, while the finance minister has committed to deploying targeted measures to stabilize the foreign exchange market [1].
Despite the currency's decline, South Korea's economic fundamentals remain robust. The country's current account surplus moderated to $28.29 billion in April 2026, down from a marginally revised all-time high of $37.93 billion in March. April's surplus is still the second-largest monthly figure on record. The month-over-month decline was mainly due to a narrowing goods surplus, which fell to $33.88 billion from $35.68 billion, even as exports surged 54.5% year-over-year, outpacing a 16.1% increase in imports [1].
The US Dollar's strength has also contributed to the appreciation of the USD/KRW pair, as foreign exchange traders monitor developments related to a potential US-Iran peace agreement. Tensions remain high following statements from Iranian Foreign Minister Abbas Araghchi, who asserted that the Strait of Hormuz is within Iranian and Omani territorial waters and warned that US regional military bases are active targets for retaliation [1].
CONCLUSION
The South Korean Won's slide to a 17-year low reflects heightened geopolitical risks and market uncertainty, despite strong economic fundamentals. Policymakers are signaling intervention and tighter monetary policy, but ongoing tensions and elevated oil prices continue to weigh heavily on the currency.