The USD/KRW exchange rate surged overnight to near 1,506, breaching the 1,500 level for the first time since March 2009 during the global financial crisis, driven by volatility in financial markets stemming from Middle East tensions. Analysts indicated that the sharp decline in the won was caused by a stronger US dollar, as concerns grew that actions by the United States and Israel could escalate into a broader regional conflict lasting longer than anticipated.

In response to the currency's fall, Bank of Korea Governor Rhee Chang-yong warned against excessive fluctuations in the foreign exchange market. Governor Rhee postponed his trip to Bangkok for an International Monetary Fund event to convene an emergency meeting in Seoul with officials from the central bank and the Ministry of Economy and Finance to assess recent movements in the won, government bond yields, and other financial market indicators. As of the latest update, the USD/KRW rate had retreated to around 1,472.

Meanwhile, South Korean stocks fell sharply for a second consecutive day, with the KOSPI index closing down more than 12%, bringing its two-day plunge to 20% and erasing all gains made since February. Speaking about the won, Finance Minister Choi Sang-mok stated, "We are maintaining a high level of vigilance and conducting daily assessments and monitoring. The current situation is largely driven by external shocks, and if these external factors stabilize quickly, the situation could change accordingly."

The Bank of Korea noted in a statement that authorities have agreed to closely monitor whether exchange rates and bond yields show excessive deviation from the nation’s economic fundamentals, including its current account balance. The central bank added that volatility in key financial market pricing variables—such as exchange rates, interest rates, and stock prices—could remain elevated for some time, depending on developments in the Middle East. Officials unanimously agreed to take timely measures in coordination with the government if necessary to prevent excessive one-sided market sentiment.

As the Middle East conflict rattles global markets and heightens concerns over rising energy prices in South Korea—which relies almost entirely on imports for its oil and natural gas—the won has faced significant pressure. Since July of last year, the Bank of Korea has held its benchmark interest rate steady for six consecutive meetings and has repeatedly warned that geopolitical tensions could amplify financial market volatility. The won has experienced substantial swings in recent months, and the escalation of Middle East conflict has added further downward pressure, as market participants worry that rising oil prices may adversely affect South Korea’s trade balance.