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Won Slumps to Lowest Since 2009 on Hawkish Fed, Political Risk - BLOOMBERG
(Bloomberg) -- The South Korean won fell to its weakest level in more than 15 years as a strong dollar combined with domestic political uncertainties slam the currency.
The dollar-won rose as much as 1.5% to 1460.2 on Thursday, bringing the won to its weakest level since March 2009 before it pared some of its losses. The currency was hit by a broad rally in the greenback after Federal Reserve officials signaled they would dial back the pace of interest-rate cuts next year. The Bloomberg Dollar Spot Index rose to its strongest level since 2022.
The won has also faced pressure from political chaos in Korea. The currency weakened even after after South Korea’s parliament on Saturday voted to oust President Yoon Suk Yeol from office, a decision that still needs to be reviewed by the Constitutional Court. The nation’s ruling party is trying to delay the appointment of judges to the court in a move likely aimed at preventing the opposition from boosting the chances of ousting Yoon.
Investors fear South Korea’s leadership vacuum will hamper the implementation of key economic policies and complicate trade negotiations with US president-elect Donald Trump’s administration. The won was already among the worst-performing in Asia this year before the martial law fiasco, as investors weighed up the impact of tariff threats on the export-oriented economy.
The won has fallen more than 11% against the dollar this year.
South Korean authorities have sought to limit the fallout of the political turmoil in the nation by stepping up warnings against market volatility, reiterating their readiness to step in to stabilize markets almost every day following the botched attempt to declare martial law in the nation earlier this month.
