Won Falls to 2009 Low as Kospi Surges on AI, Oil Disruption

The South Korean won fell to its weakest level since 2009 as the USD/KRW exchange rate approached 1,550, even as the Kospi index more than doubled this year on gains tied to artificial intelligence investment. Oil import disruptions and releases from the country’s strategic petroleum reserve were cited as downward pressure on the currency.

USD/KRW rose from a year-to-date low near 1,420 to roughly 1,550, a depreciation of more than 7% so far this year. The Kospi’s outperformance has been driven by gains in major chipmakers. Samsung Electronics and SK Hynix each surpassed $1 trillion in market value, and the four largest companies in the sector have announced capital expenditures exceeding $750 billion for the year to support data-center and AI-related investment.

Trade and geopolitical developments have affected Korea’s energy flows. The US-Iran confrontation disrupted shipments through the Strait of Hormuz, prompting South Korea to source oil from alternative suppliers and to draw on its strategic petroleum reserve. Seoul released 22.46 million barrels from inventory in March, and officials expect further drawdowns while reliance on imports routed through the Strait continues. This week saw an escalation after US strikes on Iran and reciprocal attacks directed at Kuwait.

Domestic data showed annual consumer inflation rose to 3.1% in May from 2.6% in April, above the 3.0% forecast, with food and energy costs contributing most to the increase. The economy expanded 3.6% in the first quarter, the fastest quarterly growth since early 2021.

Regional currency moves added to dollar demand. Other Asian currencies, including the Indian rupee and the Japanese yen, have fallen to multi-year lows this year, and some central banks intervened to support their currencies. Market participants point to the upcoming US nonfarm payrolls report as the next key catalyst for USD/KRW; economists expect about 85,000 jobs added in June and an unchanged unemployment rate of 4.3%.

Technical indicators show a clear upward trend for the dollar against the won. The pair rose from a low near 1,440 in May to levels above 1,540, stayed above key moving averages and invalidated a double-top pattern with a neckline near 1,440. Some traders expect the dollar to extend gains toward 1,600 if the current trend persists.

Equity gains have concentrated in large-cap exporters and technology firms focused on AI and semiconductors, while oil supply disruptions and strategic reserve releases have influenced import needs and pressure on the won.