FX.co ★ South Korean Won Softens on Oil Rally, Firm Dollar

The South Korean won weakened to around 1,475 per dollar, pulling back from its strongest level in over a month, as higher oil prices and a firmer US dollar weighed on the currency. Escalating US–Iran tensions and renewed risks of disruption in the Strait of Hormuz—following the seizure of an Iranian vessel and persistent uncertainty over a ceasefire—pushed crude prices higher, stoking concerns about Korea’s import costs and inflation outlook. At the same time, the US dollar strengthened as investors sought safe-haven assets amid waning risk appetite, putting additional pressure on emerging Asian currencies, including the won, despite relatively resilient domestic equity markets.

Separately, outgoing Bank of Korea Governor Rhee Chang-yong remarked that exchange rate movements are increasingly driven by domestic structural capital flows rather than interest rate differentials, underscoring a gradual shift in the forces shaping FX markets. Still, expectations of continued foreign inflows, underpinned by Korea’s improving market accessibility, helped contain the won’s losses.