As concerns grow over the impact of the U.S.-China tariff war on Korea’s financial markets, the won-dollar exchange rate surges past 1,430 won. A currency exchange board in Seoul displays the rate on October 12. / Reporter Moon Jae-won
As U.S.-China trade tensions flare up again, investor sentiment has turned risk-averse, pushing the Korean won-U.S. dollar exchange rate above 1,430 won during after-hours trading. The sharp decline in global semiconductor stocks also sent warning signals for the once-robust KOSPI index. With external conditions worsening for Korean exporters, concerns are mounting that the won could weaken even further.
Global financial markets tumbled on October 10 (local time) following reports that U.S. President Donald Trump is considering additional tariffs on Chinese imports. The S&P 500 fell 2.71 percent and the Nasdaq 3.56 percent, their biggest single-day declines since April 10, when mutual tariffs between the two countries rattled markets. Bitcoin and other cryptocurrencies also plunged by double digits during intraday trading. China’s move to restrict exports of rare earth minerals used in semiconductors, and Washington’s retaliatory measures, have further fueled fears of an economic slowdown.
In contrast, safe-haven assets such as U.S. Treasury bonds, the Japanese yen, and gold strengthened amid the flight from uncertainty.
The won-dollar exchange rate closed overnight trading at 1,427 won on the morning of the 11th, up 27 won from the previous day, the highest level since April 29 (1,437.3 won) on a combined day-and-night closing basis. It briefly touched 1,432 won during overnight trading. KOSPI 200 futures fell 3.99 percent in overnight trading, marking a steep decline.
The news from President Trump effectively poured cold water on the domestic and global financial markets, which had been rebounding since April.
Korea’s semiconductor sector, the key driver of the market, took a direct hit from China’s tougher regulations and rare earth export curbs. The Philadelphia Semiconductor Index, which tracks major chipmakers such as Nvidia, plunged 6.32 percent, posting deeper losses than other industries. “Investor sentiment in the semiconductor sector, which had been leading the market, has significantly weakened, which will likely weigh on Korean equities,” said Seo Sang-young, a researcher at Mirae Asset Securities. “The weak won is also stoking anxiety.”
Rising uncertainty in exports has heightened exchange rate volatility, adding to market risk. Analysts point to the spread of protectionist policies such as tariffs as a key factor behind the won’s weakness. “The global trend toward protectionism is a burden on Korea’s export-oriented economy, putting downward pressure on the won,” said Kim Jae-seung, a researcher at Hyundai Motor Securities. “Korean firms’ increased local investments abroad are also driving up demand for the U.S. dollar, further pushing the exchange rate higher.”
If the U.S.-China trade conflict drags on, the won could face additional downward pressure as the Chinese yuan, to which it often moves in tandem, continues to weaken. The stalled tariff negotiations between Seoul and Washington are also dampening the won’s value.
Some market observers are predicting that the exchange rate could soon reach 1,450 won. The outcome of ongoing investment talks with the U.S., as well as the Asia-Pacific Economic Cooperation (APEC) summit to be held in Gyeongju later this month, are expected to serve as key turning points for both the exchange rate and the Korean stock market.
※This article was translated by an AI tool and edited by a professional translator. 한글기사 원본(Original Korean Story)
