South Korea’s won has swung sharply as global markets brace for escalating U.S.-China tariff tensions. Investors are dumping riskier currencies and flocking to safe-haven assets.
The won-dollar exchange rate closed at 1,421.0 per dollar in overnight trading on April 12, its strongest level in about four months since December 5, 2024. The recovery came as the dollar index, which tracks the U.S. currency against six major peers, fell to as low as 99.005 on April 11 — its weakest since April 2022 — amid growing concerns over the U.S. economic outlook.
Fears that new tariffs could fuel U.S. inflation and weigh on consumer spending have raised the risk of recession, sending the dollar lower. The University of Michigan’s preliminary consumer sentiment index for April dropped to 50.8, marking a fourth straight monthly decline. Adding to pressure on the greenback, investors have been selling U.S. Treasuries in global markets, denting confidence in the currency’s safe-haven status.
Just a week earlier, the won had been under heavy pressure, with the rate nearing the 1,500 mark — levels last seen during the 2008 global financial crisis. It surged to 1,487.3 during intraday trade on April 9 and closed at 1,484.1, its highest since the crisis.
Market jitters deepened after Washington imposed reciprocal tariffs on several countries, including South Korea, on April 3, prompting China to threaten retaliatory duties. Investors feared South Korea would be among the hardest-hit economies in any prolonged tariff war. Speculation also mounted that China would respond by devaluing the yuan, potentially dragging the won lower in tandem.
The won’s swings over the past week were its wildest in over two years. The spread between its weekly high and low reached 67.6 won — the largest since November 2022, when the range widened by 101.0 won during the week of Nov. 7–11.
The dollar’s recent slide has been fueled by growing skepticism over its safe-haven status, as President Donald Trump’s aggressive tariff policies and signs of a U.S. slowdown rattle investors. As the greenback fell, other currencies rallied, with the yen strengthening to the 143 range per dollar and the Swiss franc surging to around 0.82 per dollar, its strongest in a decade.
Speculation has also surfaced that China and others may be trimming their holdings of U.S. Treasuries. Minneapolis Federal Reserve President Neel Kashkari noted the unusual market reaction, telling CNBC on April 11, “Normally, when you see big tariff increases, I would have expected the dollar to go up. The fact that the dollar is going down at the same time, I think, lends some more credibility to the story of investor preferences shifting.”
