28.05.202603:45:50UTC+00South Korean Won Weakens on Risk-Off Flows

The South Korean won weakened to around 1,510 per dollar, erasing gains from the previous session, as a stronger US dollar, heightened geopolitical uncertainty, and rising oil prices weighed on sentiment. Volatility surrounding US–Iran negotiations persisted, with President Donald Trump stating that Washington remained “not satisfied” with the talks, while conflicting reports about a possible reopening of the Strait of Hormuz added to the uncertainty. Brent crude’s climb back toward $96 per barrel further pressured the won, given South Korea’s heavy reliance on energy imports and its vulnerability to external price shocks. On the domestic front, policy signals provided only limited support: the Bank of Korea left its policy rate unchanged at 2.5% for an eighth consecutive meeting. Although the central bank upgraded its growth outlook on the back of stronger semiconductor exports, it also highlighted ongoing risks from inflation and currency weakness, reinforcing expectations of a cautious policy stance ahead.