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Won hits 17-year low as surging energy prices, Fed hawkishness rattle market

Published: 19 Mar. 2026, 18:48

JIN MIN-JI
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Electronic display boards show Korea's financial markets at Hana Bank's dealing room in central Seoul on March 19. The won was above the 1,500 level when the regular session closed at 3:30 p.m. — the first time for it to be at that level during intraday trading since the financial crisis in March 2009.[YONHAP]

The won closed above the psychological threshold of 1,500 against the dollar on Thursday, marking the first time it has done so since the global financial crisis 17 years ago. The move followed an earlier breach of the 1,500 level in overnight trading, as oil and gas prices surged after Israel struck Iran’s major gas field, while the Federal Reserve’s decision to keep interest rates steady amid energy-driven inflation concerns further strengthened the dollar against the won.

The won traded at 1,501 per dollar at 3:30 p.m., falling 17.9 won from the previous session. It was the first time the currency closed above 1,500 won since March 10, 2009, at 1,511.5 during the global financial crisis. The currency has already broken past this level multiple times this month—during overnight trading on March 3 and 13, and again during regular trading hours on Monday. The dollar index, which measures the dollar’s value relative to a basket of major foreign currencies, neared 100.

The won’s depreciation comes amid escalating conflict in the Middle East, after Israel struck Iran’s South Pars gas field — a critical piece of energy infrastructure shared with Qatar — according to Iranian state media on Wednesday, raising concerns over potential disruptions to global energy supply. Brent crude oil benchmark hit $112 a barrel on Thursday, more than 5 percent higher than Tuesday's prices. West Texas Intermediate crude oil futures traded at $95.46 on Wednesday.

“While oil prices remain at elevated levels around $90 per barrel, the dollar-won exchange rate is likely to show heightened volatility in the upper 1,400s to low 1,500s,” said Kim Yu-mi, an analyst at Kiwoom Securities, in a Thursday report. “If international oil prices fall below $80, the exchange rate is expected to stabilize again in the low to mid-1,400 range.”

The Federal Reserve’s decision to keep the federal funds rate in a range of 3.5 to 3.75 percent for the second consecutive time, amid concerns over energy-driven inflationary pressures, has further strengthened the dollar against the won.

“Higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy,” said Federal Reserve chair Jay Powell on Wednesday.

As the currency continues to show volatility, financial authorities have pledged to intervene if exchange rate fluctuations deviate excessively from underlying economic fundamentals.

“We are maintaining heightened vigilance over the foreign exchange market and are closely monitoring market conditions,” said Finance Minister Koo Yun-cheol during a macroeconomic and financial affairs meeting in Seoul with Bank of Korea Gov. Rhee Chang-yong, Financial Supervisory Service Gov. Lee Chan-jin and Financial Services Commission vice head Kwon Dae-young. “If the won’s movements become excessively disconnected from economic fundamentals, we will respond in a timely manner,” he added.

About the Fed’s rate decision, Koo said, “While the decision to keep interest rates unchanged was expected, remarks by Fed Chair Powell that did not rule out the possibility of future rate hikes were interpreted as somewhat hawkish.” He added, “Domestic stock prices have still recorded higher gains so far this year compared to major economies, and corporate bond credit spreads, which reflect financing conditions, remain stable,” while vowing to prepare for worst-case scenarios.

BY JIN MIN-JI [[email protected]]