South Korea’s financial landscape has been buzzing with activity and concern this January, as a string of events has thrown the spotlight on the country’s currency and its export ambitions. On January 15, 2026, the Korean won experienced its first daily gain of the year, snapping a persistent losing streak that had left policymakers and market participants on edge. The catalyst? Rare and pointed public remarks from U.S. Treasury Secretary Scott Bessent, who weighed in on the won’s recent depreciation—an intervention that, for a moment, succeeded where weeks of domestic efforts had failed.
Bessent’s comments, posted on X (formerly Twitter) on January 14, were both direct and reassuring: “The recent depreciation of the Korean won [...] is not in line with Korea’s strong economic fundamentals.” According to the Korea JoongAng Daily, this marked the first time a U.S. Treasury chief had made a public statement about Korea’s foreign exchange market, and the response was immediate. The won strengthened by nearly 10 won in offshore trading, opening at 1,465 per dollar and dropping as low as 1,457.5 in early trade on January 15, before paring gains later in the day. By 3:30 p.m., the exchange rate stood at 1,469.7 per dollar, down 7.8 from the previous session’s 1,477.5.
The rally, however, proved fleeting. Despite the initial lift, the underlying demand for dollars among Korean investors remained robust, and the won slipped back into the 1,470 range as the trading session wore on. This short-lived boost stood in stark contrast to the events of January 8, when Finance Minister Koo Yun-cheol’s attempts to calm the market failed to halt a six-session losing streak for the won.
Bank of Korea Governor Rhee Chang-yong weighed in on the situation, stating, “An exchange rate in the 1,480 range is difficult to explain based on our economic fundamentals.” Yet, even with such high-level reassurances, the won’s trajectory continued to be shaped by what Deputy Finance Minister Choi Ji-young described as “overheated demand [for the dollar].” Choi further explained, “A self-reinforcing cycle has formed in which the belief that the exchange rate will continue to depreciate—shared by the public and financial institutions—is translating into actual behavior, which in turn pushes the exchange rate higher.”
Behind these currency swings lies a deeper story about shifting investor preferences and the challenges facing Korea’s financial authorities. Data from the Korea Securities Depository revealed that domestic investors had net bought $2.24 billion worth of U.S. stocks between January 1 and January 14, 2026. At the same time, sales of dollar-denominated insurance products surged, and dollar deposit balances rose by about 1 trillion won in the week leading up to January 15. Clearly, the appetite for U.S. assets among Korean investors is not abating.
In response, the government signaled it could consider additional macroprudential measures targeting financial institutions such as banks and securities firms. Past tools have included levies on banks’ foreign currency liabilities and caps on forward foreign exchange positions. Yet, as Kang Sung-jin, an economics professor at Korea University, told the Korea JoongAng Daily, “It is difficult to expect a significant effect. Most of the policy tools available to the government appear to have been largely exhausted last year.”
Officials also ruled out the prospect of a currency swap, citing ample dollar liquidity. Choi Ji-young put it plainly: “There is ample dollar liquidity, and I do not feel at all that we are in a situation that requires a currency swap right now.”
Amid these developments, Korea is preparing to open its foreign exchange market around the clock and ease offshore trading restrictions starting in July, as part of a broader effort to join MSCI’s developed markets index. While this move is intended to boost Korea’s global financial standing, analysts warn it could further limit the authorities’ ability to manage currency volatility. As Daniel Moss, a columnist for Bloomberg, observed, large economies like the United States or China can absorb market shocks, but midsize countries such as Korea find it difficult to maintain both market openness and control.
Economists have repeatedly stressed the need for consistent, medium- to long-term policies over short-term interventions. The Korea Institute for International Economic Policy emphasized that “securing trust from economic actors through consistent policy responses is crucial,” urging authorities to strengthen rule-based operations and policy transparency. Professor Kang added that the government’s focus on retail investors as the source of volatility “reflects the declining attractiveness of the Korean market from an investor’s perspective,” underscoring the importance of improving the domestic investment environment. Lee Yoon-soo, an economics professor at Sogang University, echoed this sentiment: “Dollar demand will not ease unless there is an incentive to invest in Korea,” noting that taxes and labor market policies play a significant role.
Better coordination among policymakers is also seen as essential. Kang Kyung-hoon, a business professor at Dongguk University, argued, “Establishing a coordinated framework among institutions and delivering a consistent message is critical,” and suggested reviewing whether the current split between international and domestic financial oversight hinders timely responses.
Against this backdrop of currency pressures and policy recalibration, South Korea is also doubling down on efforts to expand its export channels, particularly for small and medium-sized enterprises (SMEs). On January 14, 2026, the Public Procurement Service (PPS) hosted an “Overseas Public Procurement Market Entry Support Briefing” at the Ambassador Seoul Pullman Hotel, inviting approximately 60 procurement companies to encourage bids with foreign governments and international organizations.
The event showcased the PPS’s flagship G-PASS (Government Performance ASSured) designation, which recognizes domestic procurement firms with proven quality and technical competitiveness, supporting their entry into global procurement markets. The PPS also outlined tailored market-entry assistance programs that can provide up to KRW 40 million per company, along with intensive support packages for newly designated G-PASS firms.
Attendees received practical insights from a procurement attaché based in Beijing and an expert seconded to the International Trade Centre (ITC), a joint agency of the United Nations and the World Trade Organization. Presentations highlighted the ITC’s Procurement Map platform, a tool that compiles government tender notices and procurement rules across more than 190 countries, offering Korean SMEs a valuable resource for identifying and pursuing overseas opportunities.
KOTRA, the Korea Trade-Investment Promotion Agency, joined the briefing to introduce complementary export acceleration programs, including export vouchers, overseas branch support, and logistics assistance. These tools are designed to help SMEs overcome recurring challenges such as market entry costs, local execution capacity, and delivery operations.
According to Lee Hyung-sik, director general for planning and coordination at PPS, the joint approach reflects a push to diversify export destinations and reduce overreliance on a limited set of markets by leveraging public procurement demand abroad. “PPS would prioritize entry into procurement markets led by foreign governments and international organizations, promote market diversification, and continue close coordination with specialized agencies such as KOTRA to help resolve real-world obstacles companies face during overseas expansion,” Lee emphasized.
As South Korea navigates the twin challenges of currency volatility and global trade uncertainty, the combination of targeted export support and calls for policy consistency may prove crucial. For now, the path forward will demand both flexibility and coordination, as the country seeks to restore confidence in its currency and unlock new avenues for growth.
