Home > Business > Finance

Forex volatility likely to ease if Middle East tensions subside, major banks say

Published: 07 Apr. 2026, 16:23 Updated: 07 Apr. 2026, 17:11

Kospi figures are shown on a digital board at Hana Bank in central Seoul on April 7. [NEWS1]

Representatives from major global investment banks and local lenders said Tuesday that volatility in the Korean foreign exchange market is expected to ease when tensions in the Middle East subside, given the country's solid economic fundamentals and stable foreign currency liquidity, according to the Ministry of Finance and Economy.

The assessment was made during a meeting between the ministry and sources from Goldman Sachs, Barclays, Deutsche Bank, BNP Paribas, Hana Bank and KB Kookmin Bank to discuss the impact of the conflict Iran war on financial and foreign exchange markets.

The market participants noted that the foreign exchange market has experienced increased volatility due to external factors, though Korea's economic fundamentals remain solid, citing strong export performance and sound external stability.

They also said the country's foreign currency liquidity remains stable, and exchange rate volatility is likely to ease quickly if Middle East tensions abate, according to the ministry.

The won has remained below the psychologically important 1,500 won level in recent sessions, as the conflict that began in late February following U.S.-Israeli strikes on Iran has pushed up global oil prices, fueling concerns over inflation and a potential economic slowdown.

Various policy measures and changing market conditions will help improve supply and demand in the foreign exchange market, according to the Finance Ministry's director general for international economic affairs, Moon Ji-sung. Moon cited such factors as the inclusion of Korean government bonds in the World Government Bond Index and the launch of the reshoring investment account.

“The government will closely monitor developments in the Middle East and take decisive measures to stabilize the market if excessive volatility in the won emerges that is not in line with economic fundamentals," Moon added.

Yonhap