The Korean won sharply depreciated, approaching the lows of the financial tsunami, with the US dollar remaining strong, and the Taiwan dollar depreciated to 31.75.

South Korea’s currency, the won, is approaching the lows seen during the financial crisis

The USD/KRW exchange rate once fell below 1,500, reaching a new low since spring 2009, close to the depths of the financial crisis. The Korea Composite Stock Price Index (KOSPI) triggered a circuit breaker after an 8% decline, temporarily halting trading to prevent panic selling.

The recent volatility in South Korea’s financial markets is mainly driven by escalating Middle East conflicts. This risk has sparked concerns among investors about rising global energy prices, leading to capital withdrawals from risk assets. Data shows the won once broke the 1,500 mark against the dollar, a first since 2009; the Korean stock index also triggered a circuit breaker after an 8% drop. This phenomenon highlights the significant impact of external risks on Asian market valuations.

The central bank held an emergency meeting, and measures will be taken if necessary

In response to the stock and currency market fluctuations, South Korea’s central bank governor Lee Chang-yong and finance officials convened an emergency meeting. According to Bloomberg, Finance Minister Koo Yun-cheol stated in Congress:

“We are highly alert and conducting daily reviews and monitoring. The current situation is mainly caused by external shocks. If these external factors stabilize quickly, the situation may change.”

The central bank emphasized that appropriate measures will be taken if needed to prevent market expectations from becoming overly one-sided, maintaining financial system stability.

The central bank governor Lee Chang-yong postponed his trip to Bangkok for IMF events, indicating the urgency of the situation.

South Korea’s energy dependence and overall economic challenges

The core impact of the Middle East conflict on South Korea’s economy is rising energy prices. Due to South Korea’s heavy reliance on imported oil and gas, higher international oil prices will directly increase production costs and may trigger imported inflation (rising domestic prices driven by higher import costs). This not only pressures trade balance but also weakens the won’s purchasing power. After six consecutive rate hold decisions, the Bank of Korea will need to balance price stability with economic support in future policy decisions.

Dollar surges, New Taiwan Dollar drops to 31.75

Over the past week, driven by geopolitical risks, the US dollar has strengthened across the board. According to CMoney, the dollar index rose 1.4% in a week, the won depreciated 2.36%, ranking the largest decline in Asia, and the New Taiwan Dollar also fell 1.38%, reaching 31.75 before press time. The Japanese yen, which usually acts as a safe haven, also depreciated 0.64%.

This article titled “Won plunges near financial crisis lows, dollar surges, and TWD drops to 31.75” first appeared on Chain News ABMedia.