[Journalism Internship] The weakening won: Impacts on consumers, producers and the limits of government response
Published: 24 Feb. 2026, 17:32
NAM WON-HO, DYLAN KIM, DAVID UN, LIAM HWANG
![The dollar-won exchange rate is displayed on a screen at a currency exchange in Myeong-dong, Jung District, central Seoul, on Jan. 28. [NEWS1]](https://koreaseafood.online/data/photo/2026/02/24/39269970-510f-48c5-ac3a-ec8f301ffc01.jpg)
The dollar-won exchange rate is displayed on a screen at a currency exchange in Myeong-dong, Jung District, central Seoul, on Jan. 28. [NEWS1]
“With high exchange rates and rising prices, consumer confidence has weakened as people become increasingly worried about everyday costs,” the Hankyoreh daily wrote in January.
The weak won has raised prices for consumers, including in energy and other imported goods, but large domestic exporters have benefited, creating a headache for a government trying to regulate the exchange rate.
The reason behind the weakening won
![A worker checks dollar bills at Hana Bank's Counterfeit Notes Response Center in Jung District, central Seoul, on Jan. 30. [NEWS1]](https://koreaseafood.online/data/photo/2026/02/24/6f0fa5e9-fd9e-476a-a79a-ed74b64615d1.jpg)
A worker checks dollar bills at Hana Bank's Counterfeit Notes Response Center in Jung District, central Seoul, on Jan. 30. [NEWS1]
The growing strength of the dollar has inversely impacted the won. According to Trading Economics, in 2025, the U.S. economy recorded huge growth. In the third quarter of last year, it increased by a rate of 4.4 percent, marking the strongest GDP growth since the third quarter of 2023. In October of last year, “the won’s value against the dollar fell by 3.2 percent, marking the largest decline among the 42 countries tracked,” according to the Bank of Korea.
In addition, Seoul's pledge to invest $350 billion in the United States in exchange for lower tariffs, agreed upon by the two governments last year, has raised expectations of strong demand for dollars, creating a significant supply-and-demand imbalance in the domestic foreign exchange market, according to Song Min-ki, a researcher at the Korea Institute of Finance.
"On the surface, the weakness is closely tied to a supply-demand imbalance caused by heavy overseas securities investment by domestic investors," said Song, noting an outflow to foreign markets, with investors opting to keep their gains in those markets instead of converting them to won.
The impact of weakening won on consumers, producers
![Coffee beans are stocked at a supermarket in Seoul on Dec. 21, 2025. [YONHAP]](https://koreaseafood.online/data/photo/2026/02/24/ef84acea-8789-4246-96bc-0958b6145b08.jpg)
Coffee beans are stocked at a supermarket in Seoul on Dec. 21, 2025. [YONHAP]
The decrease in the value of the won affects consumers by increasing the costs of imported goods and services, which leads to inflation and reduces purchasing power.
Since people in Korea mostly rely on imports for goods such as coffee, wine, beef and some electronics, products entirely dependent on imports may become more expensive in won even if their dollar price has not changed, or even decreased. Much of Korea's coffee, for example, comes from Brazil and Colombia.
If the discretion of the value of won causes coffee prices to increase, people may have to pay more for the same goods, which reduces purchasing power. The rising costs of imported raw materials such as energy, coal and intermediate goods force businesses, from food companies to restaurants, to pass these increased expenses onto consumers through higher prices for final products and services, such as food delivery or gasoline.
The value of the won also affects producers, raising the cost of imported materials.
The producer price index climbed in December of last year on the back of higher agricultural prices and a weak local currency, according to the Bank of Korea. The index, a key indicator of future consumer inflation, climbed 0.4 percent from a month earlier to 121.76 in December, a sharp rise compared to the 0.3 percent increase recorded in November.
When the prices for raw materials climb, producers will have to increase the prices of their products, which will lead to lower demand, generating fewer sales.
Implemented policies to increase won's value
![Trade containers are stacked at Incheon New Port on Feb. 1. [NEWS1]](https://koreaseafood.online/data/photo/2026/02/24/04dbc7d7-9553-4be2-a18b-6d483069ef9b.jpg)
Trade containers are stacked at Incheon New Port on Feb. 1. [NEWS1]
Despite the government’s effort to stop the won’s value from decreasing, the government is struggling to solve the problem.
On Dec. 24, 2025, after the won increased drastically to 1,480 won per dollar, the government issued verbal warnings to traders and announced a temporary capital gains tax exemption to encourage overseas investors to bring money back into Korea.
However, this didn’t go as they planned. Critics of the tax exemption policy, including investors in overseas stocks, argued that the government didn’t have enough expertise and insufficient understanding of how investors worked, while also slamming the response as too late.
"Telling people to sell U.S. stocks and buy domestic stocks is like telling them to sell an apartment in Gangnam and buy one in rural areas,” one investor told the Dong-A Ilbo newspaper.
To address the decrease in won value, “We must reduce the gap between domestic and foreign interest rates and strengthen the economic structure,” according to former Financial Services Commission Chairman Kim Seok-dong.
As the won continues to weaken, the question remains whether financial authorities can move beyond short-term measures and deliver policies strong enough to restore long-term economic stability.
BY NAM WON-HO, DYLAN KIM, DAVID UN, LIAM HWANG
with the Korea JoongAng Daily
To write comments, please log in to one of the accounts.
Standards Board Policy (0/250자)