Strengthening dollar emerges as mounting risk to Korean firms

Passenger jets of Korean Air and Asiana Airlines are seen on the runway at Incheon International Airport in this 2024 photo. Yonhap

The prolonged appreciation of the U.S. dollar against the Korean won is increasingly threatening the earnings of major Korean firms, especially those heavily reliant on exports and imports.

Concerns are mounting as the won-dollar exchange rate has hovered above 1,400 won per dollar for more than a month. The rate recently climbed past 1,470 won — a seven-month high — with no immediate signs of stabilizing.

Airlines are among the major industries highly vulnerable to the appreciation of the dollar, as they face higher fuel costs and other operating costs.

Korean Air, the nation’s flag carrier, reported a 39 percent year-on-year decline in its operating profit for the third quarter. Asiana Airlines also posted an operating loss of 175.7 billion won ($120 million) for the same period.

An electronic board in Woori Bank's dealing room in Seoul shows the won-dollar exchange rate rising, Tuesday. Yonhap

The strengthening dollar also weighed heavily on the nation’s low-cost carriers. Jeju Air reported an operating loss of 55 billion won between July and September. Jin Air and T’way Air also posted operating losses of 22.5 billion won and 95.5 billion won, respectively, for the same period.

Of particular concern is that their earnings declines are expected to continue into the fourth quarter, as the dollar remains strong amid ongoing domestic and global uncertainties.

Steel and petrochemical industry players are also structurally vulnerable to the higher dollar value against the won, as they rely on imports of raw materials for their end products.

A stronger dollar does not bode well for Korea’s major export-reliant firms in industries such as automobiles and semiconductors. In theory, a stronger dollar boosts the price competitiveness of Korean exports, but firms are now facing higher costs for imported raw materials and intermediate goods under the current exchange rate.

Vehicles are parked for export at a port in Pyeongtaek, Gyeonggi Province, Friday. Yonhap

“Most export-driven firms do not want to expose themselves to heightened risks from the exchange rate,” an official from a local conglomerate said.

According to a recent survey by the Federation of Korean Industries, local firms identified the unstable exchange rate as the second-largest export risk for 2026.

The survey on 150 firms in Korea’s top 10 export-driven industries showed that the tariff policy of the Donald Trump administration was expected to be the biggest export risk for next year. The weakening won and the unstable exchange rate came in second, with 17.3 percent of respondents picking it as a major export risk.

“Both exporters and importers are feared to face increased costs throughout next year if the exchange rate keeps hovering at this high level,” another official from a major export-reliant firm here said.