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Korean Won Plunges to 17-Year Low Amid Oil Supply Fears, Geopolitical Tensions

The South Korean won has plummeted to a 17-year low against the US dollar, driven by fears of oil supply disruptions from the escalating Middle East conflict. Central bank official Yoon Kyung-soo stated authorities are closely monitoring the market and are prepared to act against excessive volatility. The crisis has pushed global oil prices above $100 a barrel, increasing dollar demand for Korea's energy imports. Concurrent heavy foreign selling of local stocks has added further downward pressure on the currency.

Key Points: Won Hits 17-Year Low on Oil, Geopolitical Tensions

  • Won at lowest since 2009
  • Oil prices surge past $100
  • Foreign investors dump shares
  • Middle East conflict escalates
  • Central bank monitoring market
2 min read

Korean won drops to fresh 17-year low over oil supply woes, geopolitical tensions

South Korea's currency falls sharply against the dollar as Middle East conflict disrupts oil supplies and triggers foreign stock selling.

"If market sentiment becomes overly one-sided and the won shows excessive divergence from other currencies, we will take action. - Yoon Kyung-soo"

Seoul, March 31

The South Korean currency fell sharply to a 17-year low against the US dollar on Tuesday as the escalating Middle East conflict fuelled fears of further disruptions to global oil supplies and broader economic impacts.

The won was quoted at 1,530.1 won per dollar, down 14.4 won from the previous session, extending its losing streak to a fifth consecutive session, reports Yonhap news agency.

Tuesday's level marked the lowest since March 9, 2009, on a closing basis, when the won hit 1,549 as the country grappled with the global financial crisis.

"We are closely monitoring the market, as foreign investors have been selling local stocks heavily," Yoon Kyung-soo, director general of the Bank of Korea's international department, told a press briefing, noting that the pace of the won's depreciation has been rapid.

"If market sentiment becomes overly one-sided and the won shows excessive divergence from other currencies, we will take action," he added.

The won has hovered around the psychologically significant 1,500 mark in recent sessions, as the war, which began in late February following U.S.-Israeli strikes on Iran, shows no sign of ending.

On Monday (U.S. time), U.S. President Donald Trump threatened to "completely obliterate" Kharg Island, a key oil hub, along with Iran's power plants and oil facilities if a peace deal with Washington is not reached "shortly."

Tehran has dismissed the U.S.' peace proposals as "unrealistic, illogical and excessive," while a parliamentary security committee approved a draft bill to introduce a toll system for the Strait of Hormuz, according to foreign media reports.

The escalating conflict pushed up global oil prices. U.S. West Texas Intermediate (WTI) crude futures for May delivery rose 3.25 percent to US$102.88 per barrel Monday (U.S. time), surpassing the $100 mark on a closing basis for the first time since July 2022.

Higher oil prices pressured the won by boosting demand for dollars for crude imports. South Korea relies heavily on imports for energy.

Heavy foreign selling of local shares also added to the downward pressure on the currency.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 4.26 percent to 5,052.46 on Tuesday, as offshore investors dumped a net 3.84 trillion won ($2.51 billion) worth of shares.

- IANS

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Reader Comments

S
Sarah B
Watching this from India, it's a clear economic lesson. Heavy reliance on imported oil makes any country extremely vulnerable to geopolitical shocks. South Korea's situation today could be a preview for others if oil prices keep climbing. Hope our policymakers are taking note and accelerating our renewable energy plans. 🌱
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Vikram M
The foreign investor pullout mentioned here is crucial. When global uncertainty hits, "flight to safety" means money moves to the US dollar. This hurts emerging market currencies, including the INR. The BOK saying they'll act if the move is "excessive" is what our RBI does too. Central banks have a tough job balancing things.
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Priya S
It's sad to see how war thousands of kilometers away affects ordinary people's lives through higher prices and economic instability. My cousin works for a Korean MNC in Gurgaon, and they're already talking about budget cuts and hiring freezes due to global headwinds. The human cost of conflict is everywhere.
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Rohit P
While the article is about Korea, the underlying issue is global oil supply. India imports over 80% of its oil needs. Every time Brent crude crosses $100, our trade deficit widens and the rupee feels the pressure. We need a long-term strategy beyond diplomatic oil deals. Atmanirbhar in energy should be the ultimate goal.
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Michael C
A respectful criticism of the article: it focuses heavily on the immediate triggers but doesn't delve deep enough into South Korea's specific economic vulnerabilities or its historical policy responses. Comparing the 2009 crisis response to now would have provided more context. Still, a useful snapshot of current market nerves.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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