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U.S. treasury secretary's rare public remarks help lift won in first daily gain this year

Published: 15 Jan. 2026, 19:45 Updated: 15 Jan. 2026, 21:15

U.S. Treasury Secretary Scott Bessent, left, shakes hands with Finance Minister Koo Yun-cheol in a meeting on Jan. 12 in this photo uploaded onto Bessent's X account. [SCREEN CAPTURE]

Rare public remarks by the U.S. Treasury Secretary on Korea’s currency helped lift the won on Thursday, marking its first daily gain this year after weeks of failed domestic attempts to arrest its decline.

The rally, however, proved short-lived, as the won gave up much of its early gains later in the session as underlying demand for dollars remained strong.

The won was quoted at 1,469.7 per dollar at 3:30 p.m., down 7.8 from the previous session's quote of 1,477.5. The exchange rate, which moves inversely to the currency's value, opened at 1,465 and dropped to as much as 1,457.5 in early trade before paring gains later in the day.

The move followed comments by U.S. Treasury Secretary Scott Bessent, who wrote on X on Wednesday that the “recent depreciation of the Korean won [...] is not in line with Korea’s strong economic fundamentals.”

It was the first time a U.S. Treasury chief had publicly commented on Korea's foreign exchange market.

Korea’s Ministry of Economy and Finance said it had “not asked” Washington to comment on the currency, but market participants said the remarks appeared to succeed where domestic verbal interventions had failed. Some analysts said concerns that further won weakness could disrupt Korean investment in the United States may have also played a role.

The won strengthened by nearly 10 won in offshore trading following Bessent’s remarks and ended higher on Thursday for the first time this year. That contrasted with Jan. 8, when the currency continued to weaken despite comments from Finance Minister Koo Yun-cheol during a six-session losing streak.

The dollar-won exchange rate is displayed at Hana Bank's trading room in central Seoul on Jan. 15. [NEWS1]

But even the boost from the U.S. remarks proved short-lived. The won slipped back into the 1,470 range later in the session, erasing much of its early gains, even as Korean officials delivered repeated messages aimed at calming the market.

Bank of Korea Gov. Rhee Chang-yong said earlier in the day that “an exchange rate in the 1,480 range is difficult to explain based on our economic fundamentals.” Later, Choi Ji-young, the deputy minister for international affairs at the Finance Ministry, said, “The current exchange rate is being driven in part by overheated demand [for the dollar].” Neither comment reversed the broader trend.

Choi said later that “a self-reinforcing cycle has formed in which the belief that the exchange rate will continue to depreciate — shared by the public and financial institutions — is translating into actual behavior, which in turn pushes the exchange rate higher.”

Exchange rates for the won against the dollar, Chinese yuan and Hong Kong dollar are displayed on a screen at a currency exchange in Myeongdong, central Seoul, on Jan. 13. [NEWS1]

Demand for dollars among Korean investors has remained strong. Data from the Korea Securities Depository showed domestic investors net bought $2.24 billion worth of U.S. stocks between Jan. 1 and Wednesday. Sales of dollar-denominated insurance products have surged, while dollar deposit balances have risen by about 1 trillion won in the past week.

The government said on Thursday it could consider additional macroprudential measures targeting financial institutions such as banks and securities firms. Tools used in the past have included levies on banks’ foreign currency liabilities and caps on forward foreign exchange positions.

Such measures could indirectly affect retail investors through higher fees, but analysts said they were unlikely to stabilize the foreign exchange market in the near term.

“It is difficult to expect a significant effect,” said Kang Sung-jin, an economics professor at Korea University. “Most of the policy tools available to the government appear to have been largely exhausted last year.”

Officials also ruled out a currency swap. “There is ample dollar liquidity, and I do not feel at all that we are in a situation that requires a currency swap right now,” Choi said.

Concerns are growing that Korea’s ability to manage the currency could weaken further. The country plans to open its foreign exchange market around the clock and ease offshore trading restrictions from July as part of efforts to join MSCI’s developed markets index, a move analysts say could limit authorities' control.

Large economies such as the United States or China have the scale to absorb market shocks, but midsize countries like Korea find it difficult to maintain both openness and control, said Daniel Moss, a Bloomberg columnist.

Finance Minister Koo Yun-cheol, right, speaks with U.S. Treasury Secretary Scott Bessent during a meeting on the sidelines of a Group of 20 finance ministers gathering at the International Monetary Fund headquarters in Washington on Oct. 15, 2025. [MINISTRY OF ECONOMY AND FINANCE]

Economists said Korea needs consistent medium- to long-term policies rather than short-term interventions. According to the Korea Institute for International Economic Policy, “securing trust from economic actors through consistent policy responses is crucial,” and authorities should strengthen rule-based operations and policy transparency.

“The government points to retail investors as the cause, but objectively this reflects the declining attractiveness of the Korean market from an investor’s perspective,” Prof. Kang said, adding that improving the domestic investment environment was key to reversing the trend.

Lee Yoon-soo, an economics professor at Sogang University, said, “Dollar demand will not ease unless there is an incentive to invest in Korea,” noting that taxes and labor market policies play a role.

“Without such efforts, the trend will not easily reverse,” he continued.

Calls have also grown for better coordination among policymakers. Kang Kyung-hoon, a business professor at Dongguk University, said, “Establishing a coordinated framework among institutions and delivering a consistent message is critical,” adding that authorities should review whether the current split between international and domestic financial oversight hampers timely responses.

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 KIM YEON-JOO [[email protected]]