"Rapid Fluctuations Due to Tariff Fears and Relief: Future Movements Seen as Characteristics of the Won"

Relief Over Tariff Suspension, but...
US-China Tariff War and Uncertainty Remain During 90-Day Negotiation Period
Won Shows Increased Correlation with Global Trade Volume, Risk and Cyclical Currency
"Volatility to Continue for the Time Being, Gradual Decline Expected in the Second Half"

The foreign exchange market 'initially eased' as the United States announced a tariff suspension. However, the heightened volatility with sharp fluctuations reacting to related news is expected to continue for the time being. Experts predict that the won-dollar exchange rate will move significantly reflecting news related to tariff negotiations among major countries, including South Korea, and the U.S. economic situation in the short term. Depending on the outcome of tariff negotiations and the digestion of global recession concerns, it is forecasted that the level could gradually decrease in the second half of the year.

Relief Over Tariff Suspension, but US-China Tariff War and 90-Day Negotiation Uncertainties Remain

On the 10th, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1446.0 won, plunging 38.1 won from the previous day's weekly closing price (as of 3:30 PM), and traded around the 1450 won level in the early session.

Recently, the won-dollar exchange rate has risen to levels comparable to the global financial crisis. The previous day's weekly closing price (as of 3:30 PM) was 1484.1 won, marking the highest level in 16 years since March 12, 2009 (1496.5 won). The U.S. announced reciprocal tariffs on countries at a stronger level than expected, and as the US-China tariff war intensified, the won-dollar exchange rate's weekly closing price broke the financial crisis record for two consecutive trading days. Following the overnight news of the tariff suspension, the rate dropped to around 1470 won, somewhat calming the market, and the morning session continued this sentiment.

On the 9th (local time), U.S. President Donald Trump announced that about 13 hours after the start of reciprocal tariffs by country, the tariffs on countries excluding China would be suspended for 90 days, and only the basic 10% tariff would be applied. For over 70 countries, including South Korea, engaged in tariff negotiations, the tariff rates were temporarily lowered. However, tariffs on China were raised to 125%. This was a 21 percentage point increase from the previous 104%, citing direct confrontation with the U.S. The New York stock market digested the relief first overnight, significantly recovering losses and closing sharply higher.

On the 9th, as the won/dollar exchange rate surged sharply, reaching its highest level since the financial crisis during trading hours, the status board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul displayed the KOSPI and won/dollar exchange rate. On that day, the KOSPI opened at 2,329.99, down 4.24 points (0.18%) from the previous session, while the won/dollar exchange rate started at 1,484.0 won, up 10.8 won. 2025.4.9 Photo by Jo Yongjun

Won Shows Increased Correlation with Global Trade Volume, Risk and Cyclical Currency... "Volatility to Continue, Gradual Decline in Second Half"

Experts predict that the volatile market will continue for the time being. This is due to ongoing retaliatory tariffs with China and the remaining uncertainties related to negotiations that must be concluded during the suspension period. Given that China and the U.S. are South Korea's first and second largest export markets, and that the won is a risk asset currency and a cyclical currency, attention must be continuously paid to the progress of negotiations and the global economic situation. Since the global financial crisis, the highest weekly closing price of the won-dollar exchange rate was 1570.3 won on March 2, 2009.

Choi Ye-chan, a researcher at Sangsangin Securities, said, "Currencies like the won, which have a strong positive correlation between global trade volume and currency value, inevitably face depreciation due to the worsening trade environment caused by the tariff war," adding, "In particular, the US-China trade conflict increases the possibility of won depreciation." O Jae-young, a researcher at KB Securities, also said, "As long as the US-China tariff war risk continues, the won is likely to remain relatively weak despite the decline in the dollar's value."

However, from a mid- to long-term perspective until the end of the year, there is a possibility that the won-dollar exchange rate will lower its level. This is because the tariff suspension confirmed that there is room for negotiation, and the Trump administration is unlikely to allow the global economy to slip into a recession that conflicts with its goal of U.S. economic growth. Researcher Choi said, "If concerns about a global recession increase, the possibility of further depreciation of the won, classified as an emerging market currency sensitive to the economic cycle and manufacturing and industrial sectors, should be considered, but the actual possibility of a recession is seen as low." Researcher O diagnosed, "Depending on the additional domestic budget in the third quarter and the easing of the US-China trade dispute, the won-dollar exchange rate will gradually start to decline."

This content was produced with the assistance of AI translation services.