Dollar-won hits 1,500 as Korea faces 'three highs'

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Dollar-won hits 1,500 as Korea faces 'three highs'

Published: 17 Mar. 2026, 00:00 Updated: 17 Mar. 2026, 10:47

Audio report: written by reporters, read by AI

The dollar-won exchange rate opens above 1,500 won per dollar, sharply higher than the previous session, on an electronic board at the trading room of Hana Bank in Jung District, central Seoul, on the morning of March 16. [NEWS1]

As fears grow about a prolonged conflict in the Middle East, the Korean economy faces mounting pressure from surging oil prices, a weakening currency and rising inflation.

In the Seoul foreign exchange market, the dollar-won exchange rate briefly surpassed 1,500 on Monday. While the rate had crossed that level twice in night trading earlier this month, this marked the first time that it broke 1,500 in daytime trading since March 2009, during the global financial crisis.

The won opened at 1,501 per dollar, up 7.3 won from the previous session. It later trimmed its gains and closed at 1,497.5 won.

The collapse of the psychological threshold of “1 dollar equals 1,500 won” has heightened anxiety across financial markets. Historically, the dollar-won exchange rate has surpassed that level only during periods of major economic turmoil, including the 1997 Asian financial crisis and the 2008 global financial crisis. This history has fueled concerns that the sharp rise in the exchange rate could signal the beginning of another economic shock.

Korea now finds itself confronting what economists describe as “three highs”: high oil prices, a high exchange rate and high inflation.

Oil prices rising above $100 per barrel poses a serious challenge for Korea, which ranks seventh globally in crude oil consumption. According to the Hyundai Research Institute, if international oil prices remain above $100 per barrel, Korea’s economic growth rate could fall by about 0.3 percentage points.

The country’s energy supply structure adds to the risk. About 70 percent of Korea’s crude oil imports come from the Middle East and more than 90 percent of those shipments pass through the Strait of Hormuz, a key maritime route now threatened by Iran’s blockade. This heavy dependence means disruptions in the region could magnify the shock to the Korean economy.

At the same time, fears of stagflation — rising prices combined with slowing growth — are intensifying. Higher oil prices and a weaker currency could raise import costs, increase corporate expenses and reduce households’ purchasing power.

If consumption weakens as a result, the economy could fall into a cycle of low growth and persistent inflation. For an economy already struggling with structural weaknesses, that combination would be especially difficult.

In this environment, swift government action to reduce the economic impact will be necessary, but the approach should remain cautious.

Targeted support should be directed toward vulnerable households and industries most affected by the conflict rather than broad stimulus measures. Authorities should also prepare for the possibility of a prolonged crisis by establishing a national emergency command center to coordinate economic responses and monitor rapidly changing market conditions.

The government and the ruling party are discussing an additional supplementary budget estimated at between 15 trillion won and 20 trillion won ($10 billion to $13.36 billion). However, policymakers must carefully assess potential side effects, such as higher market interest rates or further depreciation of the won that could result from excessive fiscal expansion.

Prudent fiscal management and well-targeted measures will be essential if Korea is to navigate the mounting risks posed by the three highs.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.