USD/KRW hovers around 1,510 following a retreat from its highest level in 17 years

USD/KRW Retreats After Hitting 17-Year Peak

The USD/KRW currency pair is hovering near 1,510.00 during European trading hours, having pulled back from an earlier high of 1,516.76—the highest level seen in 17 years. Increased risk aversion has led to significant foreign capital outflows totaling 1.8 trillion Won, which has weighed heavily on the South Korean Won (KRW).

Supply Concerns and KRW Vulnerability

The South Korean currency remains under strain following Saudi Aramco’s decision to reduce oil shipments to Asian customers for a second consecutive month in April. Ongoing tensions involving the US, Israel, and Iran have disrupted transport through the Strait of Hormuz, limiting deliveries of Arab Light crude from Yanbu port on the Red Sea. This has tightened the supply of feedstock for Asian refineries and restricted their production capacity. Given that South Korea imports more than 90% of its oil, the KRW is especially sensitive to any supply shocks from the Middle East.

US Dollar Strengthens Amid Geopolitical Tensions

The US Dollar (USD) continues to gain ground against the KRW as investors seek safe-haven assets amid rising instability in the Middle East. The Greenback’s rally is further fueled by climbing oil prices, which are stoking inflation fears and supporting the Federal Reserve’s (Fed) more aggressive policy outlook. As a result, market participants are increasingly factoring in the possibility of a Fed rate hike by the end of the year.

Federal Reserve Policy Outlook

During its March meeting, the Federal Reserve voted 11–1 to maintain interest rates within the 3.50%–3.75% range, marking the second consecutive pause after a series of rate reductions in late 2025. According to the CME FedWatch tool, futures markets now estimate an 85.5% chance that rates will remain unchanged at the upcoming April meeting.