The Korean won’s daily volatility against the US dollar has surged to its highest level since the Covid-19 outbreak, driven by increased tensions in the Middle East. Following US-Israeli joint attacks on Iran, the won’s average daily fluctuation against the dollar hit 13.2 won, as reported by the Bank of Korea’s economic statistics system.
This level of volatility is the highest since March 2020, surpassing the 13.8 won mark during the peak of the Covid-19 pandemic. Comparatively, the current volatility is higher than the 9.7 won recorded in April 2025, triggered by US President Donald Trump’s threats of imposing significant tariffs on foreign imports.
Market data reveals the Korean won as one of the worst-performing currencies, having depreciated by 2.81 percent against the US dollar in the current month alone. This decline outpaced the euro, Australian dollar, and Japanese yen, which fell by 1.69 percent, 1.24 percent, and 1.21 percent, respectively.
Analysts attribute this heightened volatility to South Korea’s heavy reliance on energy imports and its export-driven economy. Park Hyung-joong, an economist at Woori Bank, noted that the Korean won’s sensitivity to energy-related risks has increased due to the country’s energy import dependency and open market structure.
Despite the currency’s decline, South Korean stocks managed to recover from earlier losses and closed nearly unchanged on Friday. The Korea Composite Stock Price Index (KOSPI) initially dropped by 1.66 percent but reversed course in the afternoon to end at 5,584.87, up 0.02 percent or 0.97 points.
