South Korean Won Hits 12-Year Low Amid U.S. Tariff Threats

The South Korean won has experienced a significant decline against the U.S. dollar, reaching its lowest level since the global financial crisis. On a recent trading day, the won opened at 1471.0 per dollar and fell to 1473.75 at one point, closing at 1473.2, a decrease of 5.4 from the previous day. This marks the lowest level since March 13, 2009, when the won was at 1483.5 per dollar.

The depreciation of the won can be attributed to several factors, including the announcement by the U.S. government of plans to impose "reciprocal" tariffs on imports from most countries, including a 25% tariff on goods from South Korea. This news has caused significant volatility in the won's exchange rate, which has been fluctuating around 1450 per dollar since December of the previous year due to U.S. tariff warnings and domestic political instability in South Korea.

The South Korean government has acknowledged the ongoing volatility in the financial markets and has stated that it will remain vigilant and closely monitor the situation. The government's response to the won's decline includes various measures aimed at stabilizing the currency and supporting the economy. However, the effectiveness of these measures remains uncertain as the won continues to face significant challenges.

The depreciation of the won has broader implications for the South Korean economy. A weaker won makes imports more expensive, which can lead to inflationary pressures. Conversely, a weaker currency can make South Korean exports more competitive on the global market, potentially boosting economic growth. The situation highlights the need for continued vigilance and proactive measures to address the underlying factors driving the won's depreciation.