South Korean won falls amid Trump's renewed threats to Iran

On April 6, the South Korean won dropped against the U.S. dollar following renewed threats from U.S. President Donald Trump to strike Iranian energy facilities if the Strait of Hormuz is not reopened, leading to fresh concerns about the global economy and energy prices.

The won closed at 1,506.3 per dollar, marking a decline of 1.1 won from the previous session, South Korean media reports. 

The currency opened weaker at 1,510.3 won, but the losses were partly offset after reports surfaced suggesting that the United States and Iran were exploring the possibility of a 45-day ceasefire, which could lead to a lasting peace agreement.

The sharp fluctuations in the won come as geopolitical tensions in the Middle East, specifically the ongoing conflict between the U.S. and Iran, continue to affect global markets.

Since the conflict began in late February, oil prices have surged, exacerbating inflation concerns and raising fears of an economic slowdown. The rise in oil prices has put additional pressure on South Korea, which depends heavily on energy imports.

President Trump's comments on April 5 further escalated market jitters. In a statement, he warned that Iran would face severe consequences if it failed to reopen the vital waterway, setting a new deadline for the evening of April 7. 

The remarks contributed to a sharp rise in crude oil prices, with both Brent and West Texas Intermediate (WTI) crude climbing above $110 per barrel, amid fears over disrupted global supply chains.

For South Korea, higher oil prices mean increased demand for dollars to pay for energy imports, which weakens the local currency. Experts have warned that the won could remain volatile in the coming months, with some predicting it could hover around the 1,500-won level throughout the first half of 2026.

"Even if the U.S. and Iran manage to reach a ceasefire, oil prices are likely to remain elevated, continuing to pressure the won," said Moon Jeong-hee, an economist at KB Kookmin Bank. She added that despite these headwinds, South Korea’s broader economic outlook may be more resilient, as evidenced by the country's performance on the stock market.

On April 6, the Korea Composite Stock Price Index (KOSPI) rose by 1.36 per cent to 5,450.33, driven by strong institutional buying. The market's performance suggests that domestic investors are looking past the short-term volatility in favor of longer-term growth prospects.

By Aghakazim Guliyev