An employee organizing U.S. dollars at Hana Bank’s Counterfeit Response Center in Jung-gu, Seoul. (Yonhap)
SEOUL, Jan. 13 (Korea Bizwire) — The South Korean won experienced a sharp decline last month, mirroring the drop in Russia’s ruble amid ongoing conflict, according to recent data.
This currency depreciation, driven by the December 3 martial law incident, has heightened concerns over inflation in a country heavily reliant on imports.
As the high exchange rate persists, South Korean families are feeling the strain. One traveler expressed shock at the cost of exchanging currency at an airport, underscoring the tangible impact of the strong dollar.
On January 13, 2025, the won-dollar exchange rate climbed back to the 1,470-won range, with the buying rate for dollars surpassing 1,530 won.
Before the unrest in late November 2024, the won-dollar exchange rate was below 1,400 won. However, the political instability caused the rate to spike, briefly nearing 1,500 won—a surge of more than 70 won in just one month.
Among the currencies of the world’s 30 major economies, the won posted the steepest decline, excluding Russia’s ruble.
scene from a currency exchange booth in Myeong-dong, Seoul, on December 29, 2024. (Yonhap)
Small and medium-sized enterprises (SMEs), particularly those dependent on raw material imports, are bearing the brunt of rising costs. An energy industry insider voiced concerns over increasing financial risks, citing unpredictable profit margins and growing exposure due to exchange rate volatility.
The Bank of Korea has struggled to stabilize the currency. Last month alone, it purchased over 47 trillion won in repurchase agreements to inject liquidity into the market—a scale exceeding that of 2020 during the COVID-19 crisis.
With the U.S. dollar expected to remain strong for the foreseeable future, the financial toll of the December unrest is already surfacing across various sectors of the economy.
M. H. Lee (mhlee@koreabizwire.com)
