The South Korean won has weakened sharply, languishing near 1.390–1.400 KRW per USD. Why is the won so cheap? The answers lie in a mix of economic stagnation, political turmoil, and global market dynamics.
What domestic factors are weighing down the won?
South Korea's economic growth has slowed to about 1.1 %, with sluggish consumer demand and falling investment. High household debt and fragile domestic confidence limit the Bank of Korea's moves on interest rates.
How do politics and tariffs devalue the currency?
Ongoing political instability, including the aftermath of the martial law crisis, has imperiled investor trust. The looming threat of US trade sanctions creates forex volatility.
What role does the global financial scene play?
An appreciating US dollar driven by Fed policy increases winning global strength. South Korea's trade surplus and investment abroad mean capital often leaves the country, further weakening the won.
Conclusion
The won is under pressure from homegrown economic slowdown, unresolved political risk, and dollar dominance. Unless growth returns, domestic stability improves, or the global dollar falters, the won may remain undervalued. Watch for BOK rate moves and trade policy shifts as potential turning points.
