The United States Treasury has said that the recent weakness of South Korea’s currency does not reflect the country’s underlying economic strength, according to its latest semi annual currency assessment. The Treasury noted that the Korean won experienced sharp depreciation during late 2024 and again in late 2025 despite what it described as solid economic fundamentals. The report said downward pressure intensified in the fourth quarter of 2024 after South Korea’s central bank reduced its policy interest rate and as domestic political uncertainty emerged. While currency markets remained volatile, US officials said the extent of the won’s decline could not be fully explained economic indicators alone. The assessment marks a relatively rare public comment the US Treasury on the valuation of the won against the dollar.
South Korean authorities introduced measures in December to support the currency as it approached a psychologically significant threshold against the US dollar. The won had come under sustained pressure from increased overseas equity investment domestic investors and concerns linked to additional US investment commitments under a trade agreement with Washington. More recently, the currency has recovered some ground following coordinated actions Japan and the United States that helped stabilise the Japanese yen. The won closed stronger in recent sessions, easing some immediate market concerns. Officials in Seoul have said they remain prepared to respond to excessive volatility while maintaining a market driven exchange rate framework.
In the same report, the US Treasury said that no major trading partner met the full criteria for enhanced scrutiny or designation for currency manipulation during the review period covering late 2024 and the first half of 2025. South Korea remains on the Treasury’s monitoring list, which signals closer observation but does not imply wrongdoing. The department said the list reflects trade balances and foreign exchange activity rather than accusations of policy abuse. US officials emphasised that continued monitoring aims to promote transparency and stability in global currency markets. The findings highlight ongoing sensitivity around exchange rates as governments balance domestic policy decisions with international economic expectations.
