Korean won at bottom of OECD currency performance amid stalled US trade talks

Electronic signboards at a Hana Bank dealing room in Seoul show the benchmark KOSPI rising 23.41 points to close at 3,468.65 points, while the Korean won traded at 1,392.6 per dollar, marking a slight gain of 1 won from the previous session, as of 3:30 p.m. on Monday. Yonhap

The Korean won remains one of the weakest currencies among OECD member economies, as stalled trade talks with the United States put pressure on Seoul’s foreign reserves and exchange rate, analysts said Monday.

According to data from the Bank of Korea’s Economic Statistics System, the won was priced at 1,393.6 per dollar at 3:30 p.m. on Friday, weakening by 0.2 percent from 1,390.9 won a month earlier.

The Korean won was one of three OECD member currencies to depreciate over the past 30 days, alongside the Turkish lira, down 1.2 percent, and the New Zealand dollar, down 0.6 percent.

The won’s depreciation contrasts with the overall trend of the OECD’s 16 total currencies, which appreciated by 1.1 percent on average against the U.S. dollar over the same period.

The won was traded at 1,392.6 at 3:30 p.m. Monday, marking a slight gain of 1 won from Friday’s session. But the won-dollar rate rose to as high as 1,398.5 at one point during intraday trading.

The Korean won’s weakening is surprising, especially given the recent sharp decline in the U.S. dollar’s value.

In the first half of this year, the greenback fell around 11 percent against major currencies. It was the steepest drop in more than 50 years, marking the end of a 15-year bull cycle.

Morgan Stanley Research forecasts the dollar could lose another 10 percent by the end of 2026.

Financial experts point to the stalled Korea-U.S. tariff negotiations as a key driver of the won’s weakness.

“The growing tensions over the Korea-U.S. trade talks are weighing heavily on the won, while currencies of not only advanced economies but also some emerging markets are gaining ground,” Shinyoung Securities analyst Cho Yong-gu said.

Cho referred to unresolved follow-up negotiations after the Korea-U.S. summit in July, during which Washington agreed to lower blanket tariffs on Korean exports from 25 percent to 15 percent.

The tariff reduction was in return for Korea’s promise to invest $350 billion in the U.S.

Washington has been asking for that investment to be made in cash and within a short period of time.

While Korea currently holds $416.3 billion in foreign exchange reserves, experts warn that the stability of such reserves could be threatened if the investment package proceeds on the terms demanded by Washington.

In response, Korea requested an “unlimited” currency swap deal as a safeguard, but the U.S. rejected the offer.

“This situation shows how U.S. demands could destabilize Korea’s foreign reserves and currency market and, more broadly, damage the national interest,” Shin Se-don, professor emeritus of economics at Sookmyung Women’s University, said.

He cited President Lee Jae Myung’s interviews with two Western media outlets, Time and Reuters, in which the president voiced concerns about the U.S. proposal.

In a Time interview released Thursday, Lee said he “would have been impeached” if he had accepted the terms unilaterally.

In a Reuters interview published Monday, Lee warned that Korea’s economy could face a crisis rivaling the 1997 Asian financial crisis if the government proceeds under the current U.S. demands.