South Korea Starts Verbal FX Intervention as Won Slides to 1,517.2 per Dollar
Updated
Updated · 매일경제 · May 25
South Korea Starts Verbal FX Intervention as Won Slides to 1,517.2 per Dollar
2 articles · Updated · 매일경제 · May 25
1,517.2 won per dollar — the May 22 close — prompted South Korea’s finance ministry and central bank to issue a rare verbal intervention, warning they would act decisively against excessive moves.
Officials now blame the won’s weakness on foreign stock outflows, offshore speculative bets and a stronger dollar, rather than the overseas stock buying by domestic investors they highlighted late last year.
$239 billion is this year’s projected current-account surplus, while domestic investors’ net purchases of U.S. stocks fell 34% year on year to $9.053 billion through May 22 — conditions that would normally support the won.
Foreigners sold the KOSPI for 12 straight sessions through May 22, with net sales near 50 trillion won, while the won’s real effective exchange rate fell to 85.0 in April, its lowest since the global financial crisis.
High oil prices and Middle East war risks are reinforcing South Korea’s image as energy-import dependent, lifting U.S. yields and safe-haven dollar demand even as AI-chip exports boost Korea’s trade surplus.
Is Korea's fight to save its currency a losing battle against a dominant US dollar and new geopolitical realities?
With a record surplus, why is South Korea's currency collapsing and can verbal warnings alone stop the capital flight?
2026 Korean Won Crisis: Currency Depreciation, Policy Actions, and Economic Fallout
Overview
In May 2026, the Korean won saw sharp volatility, becoming Asia’s worst-performing currency after a 0.7% drop against the U.S. dollar. This sudden decline drew immediate attention from South Korean financial authorities, who responded with a rare joint statement from the finance ministry and central bank. They described the won’s movements as excessive compared to economic fundamentals and warned they would take decisive action if needed. Although the won briefly recovered after these comments, it soon resumed its fall, highlighting ongoing concerns about currency stability and the government’s readiness to intervene.