South Korean Won shoots to 1,500 per USD as Middle East war jolts markets, worst level in 17 years
South Korean won fell past 1,500 for first time since 2009 as Middle East conflict drives oil prices higher, sending KOSPI into sharp decline.
The South Korean won weakened past a key psychological barrier for the first time in 17 years, sending the stock market sharply lower again on Wednesday, as a widening Middle East war raised worries for the world’s fourth-largest oil importer.
Israeli and U.S. forces pounded targets across Iran, prompting Iranian retaliatory strikes around the Gulf as the conflict spread to Lebanon, rattled global markets and sent oil prices sharply higher.
The growing risks of a drawn-out war in the Middle East have particular significance for net oil importing countries such as South Korea, which relies almost totally on imports for its energy.
The market reaction has been telling as around 70% of the nation’s oil purchases come from the Middle East.
The won briefly breached the 1,500 mark overnight to hit its weakest level since March 2009 at 1,505.8, before closing the session down 3.1% at 1,485.7. It was up 0.3% at 1,481.5 as of 0226 GMT on Wednesday.
“The focus overnight was on South Korea and the KOSPI weakness linked to the country’s energy dependence on Gulf supply,” BNY Mellon economists said in a note.
The benchmark KOSPI fell more than 8% to trigger circuit breakers for the first time since August 2024, after a sidecar trading curb was activated earlier in the session for a second straight day.
The punishing selloff wiped off 562.4 trillion won ($379.97 billion) in market cap over the past two days – the index had posted its biggest daily percentage drop since August 2024 on Tuesday with a 7.24% fall.
The sharp losses, as foreigners bailed out, marked an abrupt turn for a market that had soared on a world-beating, artificial intelligence-driven rally.
“They are working in both ways. Exchange rates are rising because foreigners are selling stocks, and rising exchange rates amid risk-off sentiment are again leading to foreign outflows,” said Lee Sung-hoon, an analyst at Kiwoom Securities.
Just last week, Bank of Korea Governor Rhee Chang-yong said the won was strengthening thanks to improving supply-demand conditions in the foreign exchange market after policy efforts, though it was too early to be relieved as the currency hit the strongest level since October 30, 2025 at 1,419.4.
“We will closely watch if won exchange rates and bond yields deviate excessively from domestic fundamentals even with external factors in consideration,” the Bank of Korea said in a statement soon after the market opened on Wednesday, as the central bank vowed to respond to herd-like behaviour.
“Upside is now open for exchange rates with the 1,500 level breached,” a local currency trader said, adding that there was heightened caution in the market over an outburst of dollar buying after heavy foreign selling of stocks last month.
South Korean authorities have been rolling out measures to stabilise the currency market since late last year, with President Lee Jae Myung saying in rare comments in January that the won was expected to strengthen towards the 1,400 level after a month or two.
In early trade on Wednesday, of the total 925 traded issues, only 30 shares advanced, while 889 declined. Index heavyweights Samsung Electronics and Hyundai Motor fell 2.20% and 3.53%, respectively.
Foreigners were net sellers of shares worth 370 billion won ($250.46 million), extending their selloff to a 10th straight session.
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The South Korean won weakened past a key psychological barrier for the first time in 17 years, sending the stock market sharply lower again on Wednesday, as a widening Middle East war raised worries for the world’s fourth-largest oil importer.
Israeli and U.S. forces pounded targets across Iran, prompting Iranian retaliatory strikes around the Gulf as the conflict spread to Lebanon, rattled global markets and sent oil prices sharply higher.
The growing risks of a drawn-out war in the Middle East have particular significance for net oil importing countries such as South Korea, which relies almost totally on imports for its energy.
The market reaction has been telling as around 70% of the nation’s oil purchases come from the Middle East.
The won briefly breached the 1,500 mark overnight to hit its weakest level since March 2009 at 1,505.8, before closing the session down 3.1% at 1,485.7. It was up 0.3% at 1,481.5 as of 0226 GMT on Wednesday.
“The focus overnight was on South Korea and the KOSPI weakness linked to the country’s energy dependence on Gulf supply,” BNY Mellon economists said in a note.
The benchmark KOSPI fell more than 8% to trigger circuit breakers for the first time since August 2024, after a sidecar trading curb was activated earlier in the session for a second straight day.
The punishing selloff wiped off 562.4 trillion won ($379.97 billion) in market cap over the past two days – the index had posted its biggest daily percentage drop since August 2024 on Tuesday with a 7.24% fall.
The sharp losses, as foreigners bailed out, marked an abrupt turn for a market that had soared on a world-beating, artificial intelligence-driven rally.
“They are working in both ways. Exchange rates are rising because foreigners are selling stocks, and rising exchange rates amid risk-off sentiment are again leading to foreign outflows,” said Lee Sung-hoon, an analyst at Kiwoom Securities.
Just last week, Bank of Korea Governor Rhee Chang-yong said the won was strengthening thanks to improving supply-demand conditions in the foreign exchange market after policy efforts, though it was too early to be relieved as the currency hit the strongest level since October 30, 2025 at 1,419.4.
“We will closely watch if won exchange rates and bond yields deviate excessively from domestic fundamentals even with external factors in consideration,” the Bank of Korea said in a statement soon after the market opened on Wednesday, as the central bank vowed to respond to herd-like behaviour.
“Upside is now open for exchange rates with the 1,500 level breached,” a local currency trader said, adding that there was heightened caution in the market over an outburst of dollar buying after heavy foreign selling of stocks last month.
South Korean authorities have been rolling out measures to stabilise the currency market since late last year, with President Lee Jae Myung saying in rare comments in January that the won was expected to strengthen towards the 1,400 level after a month or two.
In early trade on Wednesday, of the total 925 traded issues, only 30 shares advanced, while 889 declined. Index heavyweights Samsung Electronics and Hyundai Motor fell 2.20% and 3.53%, respectively.
Foreigners were net sellers of shares worth 370 billion won ($250.46 million), extending their selloff to a 10th straight session.
