FX.co ★ Won Strengthens on Policy Clarity, Swap Talks in Focus

On Monday, the South Korean won strengthened to approximately 1,389 per dollar, recovering from losses incurred the previous week as investor concerns over policy risks subsided. The announcement that the threshold for major shareholders would remain at KRW 5 billion provided enhanced policy clarity, alleviating fears of possible disruptions in the equity market and related capital outflows. Further bolstering the won's position were continued trade negotiations between Seoul and Washington. Government sources indicate that South Korea has proposed creating an "unlimited" bilateral currency swap agreement with the United States, as part of ongoing discussions following a tariff framework deal reached in late July. This proposal aims to bolster financial stability and serve as a buffer against fluctuations in the won-dollar exchange rate, especially as Seoul anticipates substantial capital outflows due to its pledged investment package in the US.