On the 6th, the won-dollar exchange rate closed the weekly transaction at 1,506.3 won per U.S. dollar. It was up 1.1 won from the previous trading day. It opened higher as tensions between the United States and Iran intensified early in the session, but gave back part of the gains as hopes for a truce spread during the day.

That day in the Seoul foreign exchange market, the won-dollar rate opened at 1,510.3 won, up 5.1 won from the previous transaction day's weekly closing price on the 3rd. After that, the gains widened, surging to 1,512.4 won at about 9:18 a.m.

In the afternoon of the 6th, the KOSPI index and the won-dollar exchange rate appear on the dealing room board at Hana Bank in Jung-gu, Seoul. /Courtesy of News1

Early in the session, escalating tensions between the United States and Iran drove the exchange rate higher. President Trump pressed Iran by saying on his social networking service, Truth Social, over the weekend, "Open the Strait of Hormuz within 48 hours." In response, Iran raised the level of its reaction by mentioning the possibility of attacks in the Red Sea, regarded as a detour to the Strait of Hormuz.

However, after 11 a.m., foreign media reported that the United States and Iran were discussing a plan to observe a 45-day truce, changing the tone. The rate, which had topped 1,510 won, fell to 1,504.2 won at about 11:11 a.m. It then moved in the 1,504-won range and inched up just before the close to finish the weekly transaction at 1,506.3 won.

Instability in the Middle East acts as a factor that fuels won weakness. If war drags on, demand increases for safe assets such as U.S. Government Bonds or gold, while investor sentiment toward the relatively risky won weakens. Conversely, if Middle East tensions ease, risk-off sentiment may subside and the won is likely to strengthen.

Park Sang-hyun, a researcher at iM Securities, said, "Early in the session, the exchange rate rose on concerns that the Middle East crisis would drag on, but it fell again after a report in the morning that the United States and Iran could observe a 45-day truce," adding, "After that report, oil prices also moved back to flat territory, accelerating the decline in the exchange rate."

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