Seoul, Dec 31 The local currency posted its weakest annual average against the US dollar ever this year, data showed on Wednesday, amid political turmoil and increased overseas stock investments by local investors.
The won averaged 1,422.16 won against the greenback in onshore trading in 2025, the lowest level on record, according to market data, reports Yonhap news agency.
The previous record yearly low of 1,398.39 won was set in 1998, when South Korea was hit by the Asian financial crisis.
On Tuesday, the final trading session of the year, the won was quoted at 1,439 per dollar, down 9.2 won from the previous session.
Compared with a year earlier, when the country was reeling from political turmoil sparked by then President Yoon Suk Yeol's shocking declaration of martial law, the won has risen by 33.5 won.
The won hit a yearly low of 1,484.1 per dollar on April 9, while its strongest level was 1,350 on June 30.
The quarterly average stood at 1,452.66 won in the first quarter, 1,404.04 won in the second and 1,385.25 won in the third, before slipping back to 1,450.98 won in the fourth quarter.
The won's sharp weakness this year was driven by political turmoil following the martial law imposition and the impeachment of Yoon, the persistent interest rate gap between South Korea and the United States, and increased dollar demand from retail investors' overseas stock investments. South Korea elected Lee Jae Myung as its new president in June.
In response to the currency volatility, foreign exchange authorities mobilised a range of measures to stabilise the currency, including temporary capital gains tax exemptions for investors who sell overseas stocks and buy domestic shares.
The government also eased supervisory rules on banks' foreign currency liquidity stress tests to discourage excessive dollar hoarding.
The National Pension Service (NPS) carried out strategic currency hedging, while authorities made unusually strong verbal interventions in the market.
"We will strengthen market monitoring and actively implement market stabilisation measures to address excessive herd behavior," the Bank of Korea (BOK) said in its monetary and credit policy operating guidelines for next year issued last week.
"The BOK will step up efforts to address structural imbalances in foreign exchange supply and demand, and to pursue institutional improvements aimed at enhancing accessibility for foreign investors, including the introduction of 24-hour trading in the FX market and regulatory reforms related to the offshore use of the Korean won in transactions among nonresidents," it added.
The central bank also pledged efforts to extend currency swap arrangements and hold active discussions with partner countries to bolster the country's capacity to absorb external shocks and strengthen regional financial safety nets.
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