[REVISION HISTORY]

South Korean won shifts from 17-year low to rapid rally

Updated 11 times since CLSTR started tracking revisions of this situation.

What changed

2026-08-31 03:52 UTC → 2026-09-07 06:14 UTC · added ~~removed~~

By late August, the exchange rate trended toward the 1,380 won range, with analysts suggesting it could reach 1,350 won due to sustained dollar selling. On August 24, the KRW-USD exchange rate dropped into the 1,370 won range, marking an 11-month low. This decline was attributed to increased domestic dollar supply and global dollar weakness. On August 25, the won continued to strengthen following the Bank of Korea’s decision to raise its policy rate to 3% to manage inflation. By August 28, the exchange rate dropped to 1,375.50 won, marking a 13-month low, driven by month-end dollar-selling activities by exporters. Concurrently, resident foreign currency deposits reached record levels; US dollar deposits surpassed the $100 billion threshold for the first time, reaching $108.92 billion. Total resident foreign currency deposits rose by $15.01 billion in July to reach $128.34 billion, the largest monthly increase since June 2012. Corporate deposits also hit a record high of $112.56 billion. However, by August 31, the USD/KRW rate approached the 1,380 won level following hawkish remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole Economic Symposium. Warsh emphasized that the Fed must ensure structural inflation moves toward its 2% target, stating, “If not, we have work to do.” These comments bolstered the US dollar and increased Treasury yields. ~~While~~ By early September, the won strengthened significantly, with the exchange rate ~~faced upward pressure from offshore short-covering and domestic buying demand, potential increases may be limited~~ dropping to the 1,330–1,340 won range, marking a 23-month low. This appreciation is driven by ~~month-end profit-taking from exporters, yen volatility,~~ a large current account surplus, with exports exceeding $100 billion for two consecutive months, and ~~Middle East geopolitical tensions.~~ semiconductor companies actively converting dollars into won. Consequently, corporate dollar deposits at major commercial banks have reached record highs of nearly $77 billion. Samsung Securities has lowered its year-end forecast from 1,380 won to 1,300 won.

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