The South Korean won experienced a notable depreciation against the US dollar on Thursday, driven by persistent geopolitical uncertainty surrounding the United States and Iran. Intense negotiations over the terms of a provisional two-week ceasefire in their monthlong conflict created significant market volatility.
At the close of trading, the won-dollar exchange rate settled at 1,482.5 per dollar, marking an 11.9 won decline from the previous session’s close, reflecting heightened investor caution.
This decline comes after the local currency had seen a surge to a one-month high on Wednesday. This upward movement was sparked by an announcement from US President Donald Trump, who confirmed an agreement to halt attacks on Iran for two weeks, contingent on Tehran reopening the critical Strait of Hormuz.
Iran had reciprocated, agreeing to facilitate navigation through the vital waterway, provided that all offensive actions against its territory ceased.
However, the fragile calm was short-lived. Overnight, tensions escalated once more across the Middle East. Israel declared its intent to continue its military operations against Lebanon, emphasizing that the country was not included in the broader ceasefire agreement.
In response, Iran issued a stark warning, threatening to re-close the Strait of Hormuz, citing Israel’s ongoing attacks in Lebanon as justification. This development further stoked fears of disruption to global oil supplies.
The United States and Iran are scheduled to convene over the weekend to formalize the specifics of their temporary ceasefire agreement, a meeting keenly watched by global financial markets.
The protracted conflict, which originated in late February following US-Israeli strikes on Iran, has since broadened into a wider regional confrontation. This geopolitical instability has significantly rattled global markets and contributed to a sharp increase in international oil prices, particularly due to the effective closure of the Strait of Hormuz, a crucial chokepoint for crude oil shipments.
