(Dec 26): The South Korean won rallied to the strongest level since early November on Friday, extending the previous session’s gains after policymakers pushed back against the currency’s recent weakness.
The won appreciated as much as 1.2% to 1,429.85 per dollar to add to Wednesday’s 2.3% rise as onshore markets reopened following the Christmas holiday. South Korea’s currency reversed course after approaching its weakest level in 16 years as authorities cautioned that they would act forcefully against excessive declines.
“The verbal jawboning on Christmas eve still has its effects, while a combination of broader risk-on sentiment, dollar softness and strong yuan fixing adds” to the rally in the won, said Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp. The dollar-won pair may drop further in 2026 if it closes below 1,415, he added.
Apart from the stern warning issued on Wednesday, authorities also announced a package of new tax measures to help stabilise the foreign-exchange (forex) market, while the National Pension Service implemented a new strategic currency hedging.
Policymakers were prompted to act after traders had pushed the won towards the psychologically important 1,500 level — a threshold breached only during the global financial crisis and the Asian currency meltdown in 1997. A sharply weaker currency risks importing inflation, accelerating capital outflows and could erode foreign investor confidence.
See also: EM currencies steady as USD loses haven appeal
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