KOSPI, won rebound on Strait of Hormuz transit hopes after sharp plunge

A display board in the dealing room at Hana Bank headquarters in central Seoul shows the won-dollar exchange rate and the KOSPI, Friday. The benchmark index closed 2.74 percent higher at 5,377.30, while the won finished at 1,505.2 per dollar in onshore trading, up 14.5 won from the previous session. Yonhap

Korean stocks rebounded sharply Friday, snapping the previous session’s steep decline as reports that Iran is exploring measures to keep traffic flowing through the Strait of Hormuz helped restore risk appetite.

The Korean won also strengthened against the U.S. dollar, opening higher and building on gains.

The benchmark KOSPI opened 2.7 percent higher at 5,375.50 from the previous session and closed up 2.74 percent at 5,377.30 after extending its rally. The index reversed a 4.47 percent plunge a day earlier, triggered by hard-line comments from U.S. President Donald Trump on Iran.

The secondary bourse Kosdaq, which had closed down 5.36 percent the previous day, also bounced back, opening 2.16 percent higher at 1,079.17 and finishing the session up 0.70 percent at 1,063.75.

In the onshore Seoul foreign exchange market, the won opened 8.9 won higher at 1,510.8 per dollar and advanced further, eventually closing up 14.5 won at 1,505.2 per dollar.

The local currency had weakened sharply in the previous session amid heightened geopolitical tensions, closing at 1,519.7 per dollar, down nearly 20 won. However, it recovered as investor sentiment improved following a turnaround on Wall Street overnight.

Optimism grew after Iran indicated it was in discussions with Oman to establish a framework aimed at ensuring safe navigation through the Strait of Hormuz, a critical artery for global oil shipments.

Iranian officials stressed the initiative is designed to guarantee secure passage rather than impose restrictions, though they noted that transit fees for shipping firms could be introduced.

The U.S. dollar, which had surged following Trump’s hawkish remarks on Iran, edged lower, with the dollar index, which had climbed to 100.258, slipping back below the 100 level.

However, oil prices extended their rally on expectations that the conflict could drag on.

Brent crude for June delivery climbed 7.8 percent from the previous session to settle at $109.03 a barrel, while U.S. West Texas Intermediate for May delivery jumped 11.4 percent to finish at $111.54 a barrel.

Amid exchange rate volatility triggered by the Middle East conflict, Korea’s foreign exchange reserves shrank by nearly $4 billion last month. Data released by the Bank of Korea on Friday showed reserves stood at $423.66 billion at the end of March, down $3.97 billion from the previous month.

The drop was largely driven by a stronger U.S. dollar, which lowered the valuation of non-dollar foreign assets, along with market-stabilizing steps such as foreign exchange swaps with the National Pension Service.

It marked the largest monthly decline since April 2025, when reserves dropped by $4.99 billion. At that time, authorities intervened in the foreign exchange market to shore up the won after it weakened following Washington’s announcement of reciprocal tariffs, pushing reserves to their lowest level in five years.

Even so, analysts cautioned against viewing the situation as a structural crisis.

“While a sharp depreciation of the won could stoke inflation, increase the burden of external debt and accelerate capital outflows, Korea’s economic fundamentals are markedly different from past crisis periods, as the country has become a net external creditor and significantly reduced its short-term foreign debt exposure,” Ryu Jin-yi, an analyst at KB Securities, said.