The South Korean won depreciated against the dollar following US President Donald Trump’s warnings to target Iranian energy facilities and bridges if the Strait of Hormuz remains closed. The won ended at 1,506.3 per dollar, marking a 1.1 won drop from the previous session, as reported by Yonhap news agency. Despite opening at 1,510.3 won on Monday, some losses were recovered due to news suggesting discussions between the US and Iran regarding a possible 45-day ceasefire.
The currency has experienced increased volatility lately, staying below the significant 1,500 won mark, driven by the ongoing Middle East conflict since late February. This situation has led to a surge in global oil prices, raising worries about inflation and a potential economic slowdown. President Trump extended the deadline for a deal with Iran, warning of severe consequences if the waterway is not reopened, with crude prices rising further due to escalating tensions.
Rising oil prices have put pressure on the won by boosting the demand for dollars for crude imports, especially as South Korea heavily relies on energy imports. Moon Jeong-hee, an economist at KB Kookmin Bank, anticipates that even if a deal is reached between the US and Iran, high oil prices may persist in the first half, maintaining the local currency around the 1,500 won level. Despite the Middle East instability, the benchmark Korea Composite Stock Price Index (KOSPI) climbed 1.36 percent to 5,450.33 on Monday, driven by strong institutional buying.
