Weakening won emerges as hurdle to Korea's US investment package

President Lee Jae Myung and U.S. President Donald Trump shake hands during a bilateral summit in Gyeongju, North Gyeongsang Province, Oct. 29, 2025, on the sidelines of the Asia-Pacific Economic Cooperation summit. Korea Times photo by Wang Tae-seog

Korea's weakening currency is emerging as a challenge to the country's planned $350 billion investment package in the United States, analysts said Thursday, as a senior finance ministry official prepares to travel to Washington for talks on foreign exchange market stability.

Moon Ji-sung, deputy minister for international affairs at the Ministry of Finance and Economy, will meet senior U.S. Treasury officials in Washington on Friday (local time), according to government sources.

Moon's trip is viewed as unusual, as senior officials overseeing foreign exchange policy rarely make separate visits to Washington outside regular consultation channels between the two countries' finance authorities.

While the ministry declined to comment on the details of Moon's visit, market watchers expect the discussions to focus on ensuring that exchange rate volatility does not disrupt implementation of Korea's investment commitments in the U.S.

The Korean won has remained under pressure in recent weeks, with the won-dollar exchange rate hovering around 1,500-level and trading near its weakest level since 2009, during the global financial crisis.

The won closed at 1,528.9 per dollar, Thursday, weakening 4.7 won from the previous session, after opening at 1,525.5.

The currency's prolonged weakness has raised concerns that large-scale dollar demand linked to Seoul's investment commitments could add further pressure on the foreign exchange market, as a weaker won makes it more expensive to secure the dollars needed to finance those investments.

The issue has gained urgency as Seoul prepares to begin implementing the investment program.

Seoul and Washington reached an agreement last October under which Korea pledged to invest $350 billion in the U.S. in exchange for lower U.S. tariffs. The investment package covers strategic sectors including shipbuilding, semiconductors, energy, critical minerals and artificial intelligence.

The government plans to launch the state-backed Korea-U.S. Strategic Investment Corporation in the coming weeks to oversee the program.

Under a bilateral joint fact sheet released last November, the two countries acknowledged that implementation of the investment package should not destabilize Korea's foreign exchange market.

"Should it appear that the fulfillment of the commitments in the MOU (memorandum of understanding) may cause market instability, such as disorderly movements of Korean won, the ROK may request an adjustment in the amount and timing of the funding, and the United States will, in good faith, give due consideration to such request," the document states, referring to Korea by its official name, the Republic of Korea.

Observers say both countries share an interest in preventing excessive currency volatility from affecting the investment program, though it remains unclear whether the upcoming talks between finance officials will produce measures capable of stabilizing the foreign exchange market.

U.S. dollar notes are seen at a branch of Hana Bank in central Seoul, June 4. Yonhap

"While Washington has shown little appetite for the formal currency swap agreement sought by Seoul, the two sides could still issue a message underscoring their commitment to currency market stability," said Kang Sung-jin, a professor of economics at Korea University.

Kang cautioned, however, that there are limits to what U.S. involvement can achieve.

"Washington largely views the weakness of the won as a domestic issue for Korea, making it unlikely that the U.S. would agree to delays in investment commitments because of exchange rate volatility," he said. "Ultimately, responsibility for stabilizing the currency will fall primarily on Korean authorities."

In recent days, the government has stepped up efforts to curb illegal foreign exchange transactions.

The finance ministry said Wednesday that a joint task force monitoring illegal foreign exchange activities has been converted into a permanent body as authorities intensify efforts to prevent excessive currency volatility.

The task force includes the National Intelligence Service, the National Tax Service, the Korea Customs Service, the Financial Supervisory Service (FSS) and the Bank of Korea.

Separately, the central bank and the FSS plan to inspect foreign exchange banks to examine whether they engaged in transactions intended to manipulate exchange rates or distort market price discovery.