The won has continued to weaken this year due to Trump’s tariff policies.
In February, foreign investors’ net selling in the domestic stock market reached approximately 3.70 trillion won.
Major currencies like the euro (up 4.04%) and the yen (up 5.41%) have appreciated, highlighting the won’s pronounced depreciation.
Opinion
Trump’s tariff policies have exposed structural vulnerabilities in the South Korean economy, making a recovery in the won’s value difficult. With ongoing foreign capital outflows and a lack of domestic policy momentum, additional downward pressure is mounting, limiting the likelihood of a short-term rebound.
Core Sell Point
Given the persistent tariff risk and continued foreign capital outflows, investors should adopt a conservative approach regarding their exposure to won-denominated assets.
The Korean won continues to exhibit a distinct weakness compared to major global currencies, failing to show any signs of a rebound. Even as the US dollar weakens, both the euro and the yen have appreciated by 4.04% and 5.41% respectively, while the won has continued to depreciate this year, making it the poorest performer among key currencies.
The primary cause of the won’s decline is attributed to U.S. President Donald Trump’s tariff policies and the ensuing fears of an economic recession. With an export-driven economic structure, South Korea is particularly vulnerable to U.S.-originated tariff risks. In fact, foreign investors have been continuously withdrawing from the domestic stock market to reflect these risks; in February alone, net foreign selling in the domestic market amounted to approximately 3.70 trillion won.
Unlike other major currencies, there is a lack of policy momentum to strengthen the won. While regions such as the EU and Japan maintain their currency strength through economic stimulus measures or expectations of interest rate hikes, South Korea faces additional risks such as weak domestic demand and political uncertainty. Experts believe that without a resolution to the tariff risks and political uncertainties, a short-term rebound in the won’s value is unlikely.
