Won strengthens, KOSPI rebounds as Trump delays Iran strike

The won-dollar exchange rate and the KOSPI are displayed on an electronic board at a Hana Bank dealing room in Seoul, Tuesday. The won closed at 1,495.2 per dollar, down 22.1 won from the previous session, while the KOSPI rose 148.17 points, or 2.74 percent, to finish at 5,553.92. Yonhap

The Korean won, which had tumbled to a 17-year low by breaching the 1,510-per-dollar level amid heightened tensions in the Middle East, rebounded to the 1,490 range on Tuesday, as market jitters eased after U.S. President Donald Trump said he would delay a potential strike on Iran for five days.

The country’s benchmark index, the KOSPI, also opened sharply higher, climbing 4.25 percent at the open. Within the first 15 minutes of trading, the index advanced 196.33 points, or 3.63 percent, to 5,602.08 on optimism fueled by Trump’s remarks suggesting the possibility of negotiations.

In Seoul’s onshore foreign exchange market, the won-dollar exchange rate closed at 1,495.2 won per dollar, down 22.1 won from the previous session, while the KOSPI closed at 5,553.92, up 148.17 points, or 2.74 percent.

The won had stayed above the 1,500-per-dollar level for three straight sessions after closing at 1,501 on Thursday, before slipping below that level on the fourth trading day.

In particular, the currency had climbed to 1,517.3 per dollar on Monday, marking its highest level since March 10, 2009, during the global financial crisis, when it stood at 1,561.

A social media post by Trump proved to be a turning point for market sentiment, as he cited “constructive conversations” with Tehran in a move that hinted at potential negotiations.

“I am pleased to report that the United States of America and the country of Iran have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East,” he wrote in capital letters on Truth Social on Monday (local time).

“Based on the tenor and tone of these in-depth, detailed and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period, subject to the success of the ongoing meetings and discussions.”

While Tehran rejected claims of any talks between the two sides, Trump’s message still heightened expectations for a swift de-escalation, helping improve investor sentiment.

On Saturday, the U.S. president had threatened to strike Iran’s power facilities if the Strait of Hormuz was not reopened within 48 hours. However, with about 12 hours left before the deadline, he reversed course and softened his stance.

Market analysts, however, are leaning toward the view that the recent easing of Middle East tensions may prove short-lived, particularly as Iran has denied any negotiations.

“Extreme risk-off sentiment has somewhat subsided following President Trump’s decision to delay the strike,” Lee Yoo-jung, an analyst at Hana Bank, said. “Even so, the move appears more like a temporary extension than a decisive breakthrough in talks. With geopolitical uncertainty in the Middle East still lingering, the scope for further declines in the won-dollar exchange rate is likely to be limited.”

Following Trump’s announcement of a delay in a potential strike, meanwhile, global oil prices tumbled more than 10 percent.

West Texas Intermediate (WTI) crude for May delivery slid $10.10, or 10.28 percent, to settle at $88.13 per barrel on the New York Mercantile Exchange. Brent crude for May delivery also sank 10.9 percent to finish at $99.94 per barrel.

Brent, the global benchmark, had climbed above $114 per barrel earlier in the session before plunging to around $96 shortly after Trump signaled a pause in military action.

With safe-haven demand easing, the dollar index, which tracks the U.S. currency against six major peers, also slipped 0.62 percent from the previous session to 99.219.