The Korean Won is the strongest since November, and the USD/KRW exchange rate has fallen into weakness

After South Korea resumed trading, the USD/KRW exchange rate experienced a significant adjustment. The Korean Won appreciated by as much as 1.2% against the dollar on Friday, closing at 1429.85 KRW, marking the best performance since November. This rally continued the strong momentum since Wednesday — on that day, the Won appreciated approximately 2.3%, breaking previous downward trends.

A rebound from an extreme low

The recent rebound of the Korean Won was not unexpected. Previously, the USD/KRW approached its lowest point in nearly 16 years, with market risk sentiment continuing to deteriorate. South Korean authorities issued a clear stance on Wednesday, emphasizing active intervention against excessive depreciation, which completely reversed market expectations.

Policy support and multiple positive factors

Christopher Wong, currency strategist at OCBC Bank, pointed out: "The regulatory stance before the Christmas holiday is still fermenting, combined with improved global risk appetite, a softening dollar index, and an upward adjustment of the RMB midpoint, all of which have jointly boosted the attractiveness of the Won."

From a policy perspective, South Korean authorities not only issued a clear warning signal but also introduced a combination of tax policies to stabilize the foreign exchange market. Meanwhile, the National Pension Service has launched a new strategic currency hedging mechanism, forming a multi-pronged policy framework.

USD/KRW outlook

Analysts believe that once the USD/KRW falls below 1415 KRW, the depreciation pressure of this exchange rate against the dollar could further release in 2026. This indicates that the shift in policymakers' attitude is rewriting market trading logic, and the policy support bottom for the Won is gradually being established.