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Won strengthens after Lee's extraordinary comments set target for exchange rate

Published: 21 Jan. 2026, 19:10

President Lee Jae Myung speaks at a press conference held at the state guesthouse Yeongbingwan of the Blue House in central Seoul on Jan. 21. [JOINT PRESS CORPS]

The won strengthened on Wednesday after President Lee Jae Myung said authorities expected the exchange rate to move toward 1,400 per dollar within the next couple of months, in unusually explicit comments that the market read as official concern over currency volatility.

The won opened at 1,480.4 to the dollar on Wednesday. It briefly weakened to 1,481.3 shortly after trading began, marking its first move above the 1,480 level in 17 sessions since Dec. 24 of last year.

After Lee’s remarks, the won gained sharply, reaching 1,468.7 before paring gains to close at 1,471.3 per dollar at 3:30 p.m. On a weekly closing basis, the won strengthened for the first time since Jan. 15, when U.S. Treasury Secretary Scott Bessent gave verbal support, saying a weak won was “not in line with Korea’s strong economic fundamentals.”

Lee made the comments during a press conference at the guesthouse of the Blue House, saying, “According to the authorities, they are forecasting that in about one or two months, [the dollar-won exchange rate] will come down to around 1,400 won.”

He added that the government would “continue to look at all possible measures and work to stabilize the exchange rate.”

Market participants described the president's remarks as an unprecedented form of verbal intervention. A foreign exchange market expert who asked not to be named said presidents have previously referred to exchange rates when discussing broader financial conditions, particularly during crisis periods, but “there has never been a case where a president directly pointed to a specific time frame and a specific level.”

Some analysts said additional steps to stabilize the forex market could follow measures announced late last year.

Baek Seok-hyun, an economist at Shinhan Bank, said the recent weakness of the won largely reflected heavy capital outflow. “The overwhelming factor behind the recent rise in the exchange rate has been the flow of Korean capital overseas,” he said, adding that "policymakers may look at steps to ease outflow pressure while also shaping market sentiment."

The exchange rates for different currencies against the won are displayed at a currency exchange in Myeongdong, central Seoul, on Jan. 21. [NEWS1]

Despite Wednesday’s rebound, analysts said structural factors behind the won’s weakness remained in place. Market participants have questioned the effectiveness of government stabilization measures launched in late December.

The measures included continuing the National Pension Service's strategic forex hedging operations and tax breaks for retail investors who sell overseas stocks and reinvest domestically. The Bank of Korea is waiving a forex instability levy and paying interest on mandated forex reserves from January.

External political risks have added to uncertainty. U.S. President Donald Trump on Tuesday threatened to impose tariffs on European countries opposing his plan to annex Greenland. Washington said it would levy tariffs of 10 percent from Feb. 1 and 25 percent from June 1 on eight European countries, prompting the European Union to consider retaliatory measures. This fueled worries of a broader “sell America” movement.

The dollar index — which measures the dollar's strength against six major foreign currencies — slipped 0.8 percent to 98.64, according to the Wall Street Journal on Tuesday.

Even so, the won underperformed many peers. Park Hyung-jung, an economist at Woori Bank, said global risk aversion has not translated into repatriation flows for Korea.

“When overseas conditions become unstable, money usually comes back home, but in Korea, the tendency has been to move even more funds abroad,” Park said, adding that the won continues to be seen as a risky currency.

A screen in Hana Bank's trading room in central Seoul shows the dollar-won exchange rate on Jan. 21. [NEWS1]

Some analysts, however, see potential for the won to strengthen over the medium term. Robert Subbaraman, head of global macro research at the financial services group Nomura, said Korea’s solid current account and strong chip exports should support the currency.

At a seminar hosted by the Institute for Global Economics on Wednesday, Subbaraman said the won is likely to move off historically depressed levels and begin rebounding against the dollar from the second half of this year. He forecasts an exchange rate of 1,380 won per dollar by the end of the year.

Some analysts voiced concern about the prospect of heavy-handed government intervention. Kang Sung-jin, a professor of economics at Korea University, said exchange rates are not easily steered by policy intent alone.

“Unlike stocks, exchange rates are difficult to move simply through policy will,” he said. “If a president cites a specific level and the market fails to follow, it can undermine credibility, and given that the current instability reflects supply and demand imbalances, such remarks could even end up encouraging [dollar-buying] sentiment.”

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 WON [[email protected]]