Seoul, Sep 4: South Korea’s strengthening currency is creating a mixed business environment, offering relief to importers and companies dependent on overseas inputs while putting pressure on exporters as the won climbs to its strongest level in more than a year.
The won closed at around 1,350.4 per US dollar on Friday, its strongest level in 14 months, after falling into the 1,340-won range during intraday trading. The currency has gained significantly from its recent lows as the dollar weakened and market expectations around US interest rates shifted.
For Korean businesses that import raw materials, energy and equipment, a stronger won can reduce the local-currency cost of overseas purchases. This could provide some relief to companies facing higher input costs and help improve margins if the currency remains firm.
Export-oriented companies, however, face a different challenge. A stronger won can make Korean products relatively more expensive in overseas markets and reduce the value of foreign earnings when they are converted back into the local currency. This is particularly important for major exporters in sectors such as electronics, automobiles and machinery.
At the same time, South Korea’s technology sector continues to benefit from strong global demand. The country’s recent export performance has been led by semiconductors, with demand linked to artificial intelligence providing significant support to chipmakers and the wider technology supply chain.
Investor confidence has also improved. The benchmark KOSPI rose 1.64% to 6,687.21 on Friday, while foreign investors remained active buyers of Korean equities. Semiconductor companies were among the major beneficiaries of the improved market sentiment.
The currency’s gains also come against the backdrop of substantial foreign-exchange activity linked to SK Hynix. South Korean authorities reportedly purchased about $20 billion of dollars repatriated by the chipmaker following its US listing, highlighting the scale of capital flows influencing the won.
For businesses, the direction of the won will therefore remain important in the coming months. A stable currency could support import costs and business confidence, while a rapid appreciation could become a concern for exporters competing in global markets.
With semiconductor demand remaining strong and foreign investment flowing into Korean assets, the stronger won is emerging as an important factor for corporate earnings, trade competitiveness and investment decisions across South Korea.