Won-dollar rate exceeds 1,530 for 1st time since 2009

Exchange rates are displayed on a screen in the dealing room of Hana Bank’s headquarters in Seoul, Tuesday, as the won-dollar rate surpassed 1,530 intraday. Yonhap

The Korean won breached the 1,530 mark against the U.S. dollar in intraday trading Tuesday, as mounting concerns over a prolonged Middle East conflict weighed on the currency.

The level marks its weakest point since March 10, 2009, during the global financial crisis, when it fell to 1,561 per dollar.

Equities also came under heavy pressure, with the benchmark KOSPI sliding sharply and nearing the 5,000 level.

In the Seoul foreign exchange onshore market, the won opened at 1,519.9 per dollar, down 4.2 won from the previous session, and continued to weaken, briefly touching 1,536 during the day. It later finished at 1,530.1 per dollar, a decline of 14.4 won from the previous session.

Pressure on the won had already been building in the previous session’s overnight trading, when it weakened to around 1,521 per dollar, signaling intensifying depreciation.

Meanwhile, the Bank of Korea issued a verbal intervention, warning it could step in if market sentiment and herd behavior cause excessive volatility.

"While we are not setting a specific target for the exchange rate, the pace of the recent rise has been unusually fast," Yoon Kyung-soo, director general of the central bank's international department, said during a briefing. "We are closely watching the situation, especially with significant foreign outflows from the stock market affecting supply and demand.”

Lingering concerns over a prolonged Middle East conflict have been a key driver behind the currency’s downturn.

U.S. President Donald Trump warned via his Truth Social platform that failure to reach a prompt agreement with Iran could lead to strikes on critical infrastructure, including power facilities, oil fields and Kharg Island.

Israeli Prime Minister Benjamin Netanyahu further unsettled markets by offering no clear timeline for an end to the conflict. Reports of U.S. special forces deployments to the Middle East have also heightened fears of a broader escalation.

The stock market also plunged amid the turmoil. KOSPI dropped more than 4 percent shortly after opening, briefly sinking to the 5,050 range — its lowest level since the conflict began. It ultimately closed at 5,052.46, down 224.84 points, or 4.26 percent, from Monday.

Selling by foreign and institutional investors drove the downturn, with each offloading more than 1 trillion won ($651 million) in shares, while retail investors stepped in as net buyers.

Secondary bourse Kosdaq followed a similar trajectory, ending at 1,052.39 after falling by 54.66 points, or 4.94 percent, reflecting broad-based weakness across the market.

Oil prices surged sharply. U.S. West Texas Intermediate crude for May delivery closed at $102.88 per barrel, breaking above the $100 threshold for the first time since July 2022. Brent crude also extended its rally, holding firm in the $112 range.

Market analysts say financial market volatility is likely to remain elevated for the time being, as risks from a prolonged conflict, surging oil prices and a stronger dollar converge.

“A meaningful stabilization of the won-dollar exchange rate would be difficult without a de-escalation of tensions involving Iran and a pullback in oil prices,” said Park Sang-hyun, an economist at iM Securities. “If the conflict expands further, additional pressure on the exchange rate would be hard to avoid.”