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Won sinks to lowest real value since global financial crisis to trade in mid-1,470 range

Published: 24 Nov. 2025, 17:43

At Hana Bank’s headquarters in central Seoul, an electronic board in the dealing room displays the Kospi and Kosdaq indexes and the dollar-won exchange rate after the market opens on Nov. 24. [NEWS1]

The Korean won’s real value fell to its lowest level since the global financial crisis as the currency traded in the mid-1,470 won range against the dollar.

The Bank for International Settlements (BIS) said on Thursday that the currency's real effective exchange rate stood at an index of 89.09 at the end of October, down 1.44 points from a month earlier. The figure is lower than 89.29 in March, when political uncertainty rose following the Dec. 3 martial law declaration last year. It marks the weakest level since 88.88 in August 2009.

A real effective exchange rate index compares a currency’s purchasing power to that of major trading partners. With 2020 set at 100, readings below 100 indicate a weaker currency. Among 64 countries covered in the BIS database, Korea ranked third-lowest after Japan at 70.41 and China at 87.94. Korea also recorded the second-largest monthly drop of 1.44 points, following New Zealand.

The won closed at 1,475 to the dollar on Friday. Some analysts say the rate could move closer to 1,500 won.

"Excess exposure to overseas equity investment and slow foreign exchange conversion by exporters under the U.S. investment agreement both push the exchange rate higher,” said Wi Jae-hyun, an economist at NH Futures.

Bank of Korea (BOK) Gov. Rhee Chang-yong said in last month’s Monetary Policy Committee meeting that the bank does not aim for a particular exchange rate level.

“We do not target a specific exchange rate level; we focus on reducing volatility,” Rhee said.

He maintained the central bank’s rate-cut stance even as the won moved from the 1,300 won range late last year to near the 1,500 won level this year.

“At this level, the exchange rate could affect inflation, so we continue to monitor it," a BOK official said.

Korea’s import price index rose 1.9 percent in October from a month earlier to 138.17, marking four straight months of increases. Because there is a lag in the reflection of import costs in domestic prices, households may face higher consumer prices in the coming months.

A weaker won already influences some everyday goods. Data from the Korea Institute for Animal Products Quality Evaluation show frozen beef ribs from the United States sold in October for 4,435 won per 100 grams ($13 per pound), up 3 percent from a year earlier and 19.3 percent above the long-term average.

One major supermarket reported a 20 percent on-year rise. U.S. cattle supply tightened under unusual weather conditions, and the weaker won pushed domestic prices higher.

Energy costs also climbed. The Korea National Oil Corporation’s Opinet service showed average gasoline prices in Seoul at 1,809 won per liter ($4.60 per gallon) as of 5 p.m. on Sunday, after breaking above the 1,800 won level on Nov. 18.

The photo shows fuel prices posted at a gas station in Seoul on Nov. 23. [YONHAP]

Economists say structural factors shape the currency trend. Advanced economies also see currency depreciation when overseas investment increases, but reserve currency countries like the United States and Japan offset some weakness with returning dividend and interest income.

“Korea is not a reserve-currency country, and overseas investment earnings do not return to the domestic market. They flow back overseas,” said Park Hyung-jung, an economist at Woori Bank. “The government and the BOK need to offer clearer signals so that companies and households can set expectations.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YU-MI, KIM KYUNG-HEE [[email protected]]