The South Korean won has rebounded to the 1,420 range against the dollar in recent days, recovering from levels that had approached 1,500 per dollar earlier this month, as a wave of dollar selling across global markets weighs on the greenback.
The dollar’s slide has been driven by weakening investor confidence in U.S. policy consistency, with President Donald Trump’s shifting trade stance fueling a “Sell America” mood in financial markets. The dollar index, which measures the U.S. currency against six major peers, has dropped 9.4% from its 2025 peak in January.
Despite this, the won has only modestly reflected the dollar’s weakness. While the greenback has fallen sharply this year, the won has gained just 2.7%, leaving it undervalued by at least 5%, according to analysts.
“The fair value for the won-dollar rate, based on its statistical relationship with the dollar index, should be below 1,350,” said Lee Min-hyuk, economist at KB Kookmin Bank. “The won remains significantly undervalued against global dollar weakness.”
A key drag on the won is the prolonged uncertainty over U.S.-China trade relations, a critical risk for South Korea’s export-driven economy. The won often moves in tandem with the Chinese yuan, and concerns over further yuan depreciation in the event of escalating tensions have limited gains in the Korean currency.
On April 15, the won closed at 1,425.5 per dollar in onshore trade, sharply stronger than the 1,484.1 recorded on April 9 — its weakest since the 2008 global financial crisis — when new tariffs imposed by the Trump administration took effect.
The retreat has been broad-based, with the euro, yen and Swiss franc gaining 9.8%, 9.3% and 10.9%, respectively, against the greenback between Jan. 13 and April 15.
The won’s smaller rebound reflects concerns over slowing domestic demand and investment in South Korea, compounded by fears that a global economic slowdown could intensify capital outflows. Foreign investors have sold a net 4.5 trillion won ($3.17 billion) in South Korean shares this month alone, further pressuring the currency.
Market participants widely agree the won’s near-term direction hinges on how the U.S.-China tariff dispute plays out.
“In Trump’s first term, we saw repeated patterns of won weakness during trade conflict phases and rebounds during negotiation phases,” said Baek Seok-hyun, economist at Shinhan Bank. “While we’ll likely see more of these swings, both sides now have incentives to shift toward talks sooner rather than later.”
However, risks remain. Should tensions escalate and Beijing deploy a yuan devaluation strategy — as it did in Trump’s first term, when the yuan fell nearly 10% — the won could weaken sharply.
“In that scenario, the won-dollar rate could again test 1,500,” said Park Hyung-jung, economist at Woori Bank. “But China faces inflationary risks from a weaker currency due to sluggish domestic demand, so it may not pursue such aggressive devaluation this time.”
With uncertainty set to persist, currency strategists recommend a cautious, phased approach to foreign exchange-related investments.
“It’s a highly volatile phase where every statement from Trump or move from China can jolt markets,” said Ahn Ji-eun, a private banker at Hana Bank’s Boramae branch. “We’re advising clients to build positions gradually rather than making one-off bets.”
