The South Korean won fell to its lowest level in over 16 years on Apr. 8, closing at 1,473.2 won per US dollar. This marks a 5.4 won decline from the previous session and the weakest level since Mar. 13, 2009, during the global financial crisis.

The won opened at 1,471.0 and dropped to as low as 1,473.75 during intraday trading.

The depreciation follows concerns over US President Donald Trump’s newly announced tariff measures.

These include a 25% duty on South Korean goods and a baseline 10% tariff on foreign imports, effective Apr. 5. Country-specific tariffs will take effect Apr. 9 (US time).

The finance ministry expects continued market volatility and will monitor developments closely.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ Historical pattern of currency vulnerability during external shocks

The won’s current drop to 1,473 won per dollar mirrors previous financial crises when external shocks severely impacted Korea’s export-dependent economy.

During the 2008 global financial crisis, the won depreciated approximately 40% against the dollar, demonstrating similar vulnerability to today’s situation 1.

This represents a recurring pattern in South Korea’s economic history, as the won previously peaked at 1,995 per dollar during the 1997 Asian financial crisis, when the country faced international debt payment challenges 2.

South Korea’s heavy reliance on exports makes its currency particularly sensitive to trade disruptions, with the current 25% tariffs threatening to significantly impact its trade balance and economic stability.

2️⃣ South Korea’s stronger economic fundamentals compared to previous crises

Despite the currency pressure, South Korea enters this tariff shock with more robust economic foundations than during past crises, though vulnerabilities remain.

South Korea significantly strengthened its foreign reserves after the 1997 crisis, increasing from just $8.4 billion before that crisis to $260 billion by 2007, providing greater buffer against external shocks 3.

The corporate sector has also become more resilient, with debt-to-equity ratios dropping dramatically from 426% in 1997 to 131% in 2008, reducing financial vulnerability in the private sector 3.