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Won's Depreciation Outpaces Korea's Strong Economy
31 Jan
Summary
- U.S. Treasury stated South Korean won depreciation was inconsistent with economic fundamentals.
- Won faced acute pressure in late 2025 due to domestic political instability.
- South Korea remains on the U.S. Treasury's monitoring list for currency practices.
The U.S. Treasury has issued a notable assessment regarding the South Korean won, indicating that its recent depreciation does not reflect the country's robust economic fundamentals. This observation was part of the Treasury's semi-annual currency report, released on Thursday, January 30, 2026.
Depreciation pressures on the won were particularly acute during the fourth quarter of 2025. This period saw the South Korean central bank reduce its policy rate in November 2025 and was marked by the onset of domestic political instability. The currency weakened further in late 2025, a trend the U.S. Treasury found inconsistent with Korea's strong economic standing.
This rare U.S. commentary on the dollar-won exchange rate followed intervention by South Korean authorities in December 2025. They implemented measures to support the won as it approached the significant psychological threshold of 1,500 per dollar. Investor concerns, including overseas stock purchases and potential U.S. investment agreements, also contributed to the pressure.
In its comprehensive report, the Treasury concluded that no major trading partner met all criteria for enhanced currency practice analysis during the latter half of 2024 and the first six months of 2025. While South Korea was not accused of currency manipulation, it remains on a monitoring list requiring close attention.
