Korean Won Depreciation Eases but FX Volatility Persists, Financial Authorities Say

Kiswahili

In a follow-up to December meetings, top South Korean financial officials on January 8 stated the Korean won's excessive weakness has eased since late last year, though FX market volatility remains high. They pledged continued stabilization amid a rate of 1,449.10 won per dollar.

This January 8, 2026 meeting at Seoul's Hall of Banks—attended by Finance Minister Koo Yun-cheol, Bank of Korea Governor Rhee Chang-yong, Financial Supervisory Service Governor Lee Chan-jin, and Financial Services Commission Vice Chief Kwon Dae-young—built on December actions, including intensified monitoring, eased bank FX rules, and a December 24 verbal intervention against excessive won weakness.

Authorities assessed that depreciation has moderated from recent lows near 1,480 per dollar, with the won strengthening to its highest in nearly two months. However, they noted the exchange rate remains disconnected from fundamentals and the market highly volatile.

The Ministry of Economy and Finance announced prompt follow-up measures, emphasizing firm, consistent policy efforts. Participants reaffirmed readiness for comprehensive stabilization amid global pressures.

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Illustration of South Korean traders and regulators responding to won's record low against USD amid intensified FX monitoring.
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Financial authorities intensify FX monitoring and ease bank rules amid ongoing won decline

Imeripotiwa na AI Picha iliyoundwa na AI

Following the December 15 warnings, South Korea's financial authorities on December 18 intensified monitoring of the volatile FX market and announced eased regulations for banks, as the won hit 1,479.80 per dollar—the lowest since April.

South Korea verbally intervenes as won nears 16-year low, building on prior stabilization efforts

On December 24, 2025, South Korean authorities issued a verbal intervention stating an excessively weak Korean won is undesirable, as the currency hit levels not seen since 2009. Building on measures from December 18—including eased bank rules and intensified FX monitoring—the won rebounded from 1,483.6 to the 1,470 range post-statement.

Banks join authorities to stem won's weakness

Imeripotiwa na AI

South Korea's major commercial banks are intensifying efforts alongside government foreign exchange authorities to curb the local currency's recent weakness. They are offering incentives for customers to sell U.S. dollars and lowering interest rates on foreign-currency deposits. The won has been hovering near the 1,450 level against the dollar amid ongoing pressures.

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Purchases of the U.S. dollar have lessened in South Korea following a surge late last year prompted by expectations of further Korean won weakening, industry sources said. The trend reversal stems from foreign exchange authorities' stabilization measures, including temporary capital gains tax exemptions.

Seoul stocks end higher on chip rally as won surges

Imeripotiwa na AI

South Korean stocks closed higher on December 26, driven by gains in major tech shares like Samsung Electronics and SK hynix. The won strengthened sharply to 1,440.3 against the dollar, up 9.5 won, following the National Pension Service's resumption of foreign exchange hedging and authorities' intervention. This marked a rebound from near 16-year lows.

US Treasury keeps South Korea on currency monitoring list

The US Treasury Department announced on Thursday (local time) that it is keeping South Korea on its foreign exchange monitoring list. The report assesses that the recent weakness of the Korean won does not align with the country's strong economic fundamentals and views it as excessive depreciation. The South Korean government plans to maintain close communication with the US to ensure market stability.

Seoul shares rise for third day to close near 5,000

Imeripotiwa na AI

South Korean stocks closed higher on Friday at a fresh peak just shy of 5,000, led by gains in technology and brokerage shares. The benchmark KOSPI index rose 0.76 percent to 4,990.07 after hitting an intraday record of 5,021.13. The Korean won strengthened against the U.S. dollar.

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