The won-dollar exchange rate against the U.S. dollar topped the 1,530-won level on the 31st. It is the highest level since March 10, 2009 (1,561 won) during the global financial crisis.
On the day, the won-dollar rate opened at 1,519.9 won, up 4.2 won from the previous day. Right after the open, the gains narrowed, briefly touching the 1,518-won range. But it kept rising afterward, surging to 1,535.9 won at 12:48 p.m. It is a record high in 17 years.
The weakness in the won is seen as stemming from signs that the war between the United States and Iran will drag on. When geopolitical risks persist, markets shy away from risk assets. In such cases, the value of the won, which is not a key currency, tends to fall.
Overnight, U.S. President Donald Trump said on the social media platform Truth Social that if no armistice agreement is reached with Iran, "we will blow up and completely devastate all of their (Iran's) power plants, and Kharg Island (probably all desalination plants as well), ending our lovely stay in Iran." He added, "We have intentionally not touched these yet."
In response, Iran is moving to levy tolls on ships passing through the Strait of Hormuz. Local media reported that the Iranian parliament's National Security Committee approved a management plan to strengthen control over the Strait of Hormuz. The plan is said to include charging tolls to vessels transiting the strait.
Foreign selling in the domestic stock market is also fueling the rise in the won-dollar rate. On the day, foreigners posted net sales of about 2.7 trillion won on the Korea Composite Stock Price Index (KOSPI) and 100 billion won worth of stocks on the KOSDAQ market.
Park Sang-hyun, a researcher at iM Securities, said, "An exchange rate above 1,500 won means the won is undervalued relative to Korea's economic fundamentals," adding, "We should be cautious about linking the sharp jump in the exchange rate to a crisis in the domestic economy or financial markets."