Home > Business > Finance

As Korean won continues to sink, China weathers Middle East storm

Published: 18 Mar. 2026, 07:00

A person looks at a stock price monitor showing New York Dow and Nikkei indexes and the dollar-Japanese yen exchange rate at a security company on March 17, 2026, in Tokyo. [AP/YONHAP]

Concerns just keep on growing over rising oil prices while the currencies of Korea and Japan continue to tank, but China appears to be weathering the prolonged Middle East crisis with relatively limited economic impact.

As of Tuesday, the Korean won and Japanese yen fell sharply by 3.74 percent and 2.22 percent against the dollar this month, respectively, while the yuan declined by just 0.45 percent during the same period.

The Korean won continued to weaken on Tuesday in the Seoul foreign exchange market, where the dollar-won exchange rate stood at 1,493.6 won as of 3:30 p.m., remaining above the 1,490 won level. A day earlier, it surpassed the 1,500 won mark during daytime trading for the first time since the 2009 global financial crisis. The dollar-yen exchange rate, which had hovered in the mid-155 yen range before the Middle East conflict, quickly approached 160 yen, heightening concerns over a sharp depreciation of the Japanese currency.

In contrast, the Chinese yuan has remained relatively stable. Both the onshore yuan and the offshore yuan traded in the range of 6.85 to 6.9 yuan per dollar during the same period.

Stock markets show a similar pattern. As of Tuesday, Korea's benchmark Kospi had dropped by 9.7 percent compared to the end of last month, with a plunge of over 12 percent on March 4 threatening to push it below the 5,000 level. Japan’s Nikkei index also fell by 8.8 percent over the same period, while China’s Shanghai Composite Index declined by only 2.7 percent.

China’s relative resilience despite surging oil prices is largely attributed to its diversified crude oil import portfolio. Japan imports more than 90 percent of its crude oil from the Middle East, and Korea sources around 70 percent from the region. Since a significant portion passes through the Strait of Hormuz, any disruption would directly impact energy supply.

The dollar-won exchange rate is displayed at a screen at a currency exchange in Incheon International Airport on March 17, 2026. [NEWS1]

China, however, relies on the Middle East for roughly half of its imports. It has expanded its supply sources to countries such as Russia, Brazil and Angola, diversifying its crude oil imports. In addition, if maritime transport is disrupted, China can also import oil overland through pipelines connecting Russia, Central Asia and Myanmar. Following the Russia-Ukraine war, it has been able to import more Russian crude at discounted prices due to Western sanctions.

China has also accumulated substantial oil reserves. Its strategic petroleum reserves are estimated at 413 million barrels, and could reach up to 1.4 billion barrels when underground storage is included. This is more than three times the size of the United States’ strategic reserves, which stand at around 415 million barrels.

Another key difference lies in energy sources. While industries in Korea and Japan rely heavily on imported crude oil and liquefied natural gas, China’s primary energy source is coal. Around 60 percent of China’s total energy consumption comes from domestically produced coal, meaning that the impact of rising global oil prices on industrial costs may be less severe than in Korea or Japan.

The relatively limited volatility in China’s foreign exchange market is also influenced by government management. China operates a managed floating exchange rate system in which the central bank sets a daily reference rate, and trading is allowed within a band of plus or minus 2 percent.

A motorcyclist fills up his vehicle at a gas station in Seoul on March 17, 2026. [NEWS1]

“The relative stability of China’s market compared to other East Asian economies amid the Middle East crisis is partly due to its Belt and Road Initiative, a global infrastructure strategy,” said Baek Seok-hyun, an economist at Shinhan Bank. “With a diversified energy supply chain, China is likely to face limited impact even if the crisis is prolonged.”

“Korea’s high dependence on Middle Eastern crude oil means that a prolonged conflict would have a greater impact on its economy,” said Kang Sung-jin, a professor of economics at Korea University. “It is necessary to seriously consider diversifying oil supply sources to regions such as the United States.”

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.
BY YEOM JI-HYEON [[email protected]]