South Korean Won Faces Continued Decline Amid Policy Response

Currency Weakness Contradicts Strong Economic Fundamentals

The South Korean won has extended its losing streak, depreciating 0.3% to 1,448.6 per USD on January 5, 2026. This marks the fourth consecutive trading session of decline, despite Korea's robust economic fundamentals. The currency had previously rebounded sharply from its eight-month low in late December following policy interventions aimed at reversing the trend.

Government and Central Bank Response

Finance Minister Koo Yun-cheol, in a prepared speech for the New Year's event on January 5, stated that the government would closely monitor financial and foreign exchange markets. The administration pledged to address the structural demand-supply imbalances in the foreign exchange market. This commitment comes as policymakers face pressure to stabilize the currency amid its persistent decline.

Market Implications

The won's continued weakness despite Korea's strong economic indicators has raised concerns among investors and policymakers. The currency's performance is being closely watched as it may impact Korea's export competitiveness and overall economic stability. The government's swift response indicates a proactive approach to managing currency volatility and maintaining market confidence.