FX.co ★ South Korean Won Strengthens Amid Political Calm and Global Trade Optimism

This week, the South Korean won strengthened, approaching 1,360 per dollar, marking a seven-month peak as investor sentiment improved following the inauguration of President Lee Jae-myung. The political landscape stabilized with the departure of former President Yoon Suk Yeol, whose imposition of Martial Law had previously unsettled financial markets. President Lee's administration has prioritized economic recovery and the careful balancing of relations with both the United States and China, which together comprise over 35% of South Korea's export market. Additionally, the won benefited from diminished global trade uncertainties and ongoing US-China negotiations concerning tariffs and supply chains, which increased demand for Asian currencies. Despite these developments, the economic outlook remains tentative. The nation's GDP saw a contraction of 0.2% in the first quarter of 2025 due to sluggish domestic demand and declining exports. Concurrently, foreign exchange reserves decreased to $404.6 billion in May, a result of previous interventions aimed at stabilizing the currency. Discussions about currency policy with the United States have sparked speculation regarding potential future monetary policy adjustments to bolster the won.