The South Korean won (KRW) is the official currency of South Korea. As the 13th most traded currency in the world, the won plays an important role in the global forex market. This article provides an in-depth look at the history, use, exchange rates, and predictions for the South Korean won.

A Brief History of the South Korean Won

The won was introduced on February 15, 1953 to replace the Korean yen. It was subdivided into 100 jeon. The won was pegged to the U.S. dollar at a rate of 15 won to 1 dollar. South Korea maintained the peg against the dollar until 1962 when the country adopted a devalued exchange rate of 1 won to $1.

In 1968, the South Korean government implemented a series of economic reforms aimed at promoting exports. This led to the won being devalued against the dollar once again, to a new fixed rate of 400 won to 1 dollar.

The 1997 Asian financial crisis caused the won to plummet in value against the dollar. By December 1997, the exchange rate hit an historic low of 2,000 won to 1 U.S. dollar. In an effort to stabilize the currency, South Korea received a bailout package from the International Monetary Fund (IMF) worth $57 billion.

As part of the IMF deal, the won was allowed to float freely starting in December 1997. The currency steadily gained in value over the next few years as the economy recovered.

In June 2009, North Korean won notes were demonetized by the South Korean government as a control on the underground economy. The move came after estimates that up to 80% of North Korean notes were being used illegally in South Korea.

Today, the won floats freely on the foreign exchange market. While the Bank of Korea occasionally intervenes to prevent extreme volatility, the won reflects the supply and demand conditions in the FX market.

KRW Currency Code and Subunits

The currency code for the South Korean won is KRW. This three letter abbreviation is used to quote won prices in the foreign exchange market.

The won is divided into 100 jeon. However, jeon are no longer used in practice. All transactions take place in integer multiples of 10 won.

The banknotes issued by the Bank of Korea come in denominations of 1000 won, 5000 won, 10,000 won and 50,000 won. Coins are minted in denominations of 10 won, 50 won, 100 won and 500 won.

KRW Exchange Rates and Cross Rates

As a free floating currency, the won’s exchange rate with foreign currencies fluctuates according to the forex market. Here are some of the most common KRW exchange rates:

  • KRW/USD: 1024.86 (August 25, 2023)
  • KRW/EUR: 0.99
  • KRW/JPY: 133.45
  • KRW/GBP: 0.82
  • KRW/AUD: 1.42
  • KRW/CAD: 1.34

When trading the won, it’s important to keep an eye on the KRW’s exchange rates and cross rates with major currencies. Factors such as relative inflation, interest rates, economic growth and political stability influence the exchange rate.

The won is often influenced by the cross rate with the Japanese yen. As two of Asia’s leading economies, economic conditions in Japan can spill over to impact the Korean won.

Benefits and Risks of Trading KRW

Here are some of the key benefits and risks to keep in mind when trading the South Korean won:


  • High liquidity as a major Asian currency
  • Opportunities to profit from Korea’s strong economy
  • Won strength reflects economic growth and exports
  • Weak won aids Korean exports and economic growth


  • Volatility from global financial market swings
  • Geopolitical tensions with North Korea
  • Potential for currency interventions by Bank of Korea
  • High correlation to economic growth in China and Japan

As with any currency, it’s critical to closely analyze the economic and political events that can cause the won to fluctuate in value. Pay attention to South Korean GDP reports, interest rate changes, inflation data and news regarding North Korea.

Factors that Influence the South Korean Won Exchange Rate

Many complex factors impact the exchange rate for the KRW against other major currencies. Here are some of the key drivers:

  • Interest rates – The Bank of Korea adjusts short-term interest rates to control inflation and economic growth. Lower rates tend to weaken the won by driving investments abroad in search of higher yields.
  • Economic growth – Stronger than expected GDP growth and exports will generally boost the won by raising demand. Slower growth has the opposite effect.
  • Inflation – Higher inflation reduces purchasing power, so rising inflation tends to depreciate the won. Low inflation and strong economic fundamentals support a stronger won.
  • Trade flows – The won strengthens with higher demand for South Korean exports of cars, ships, petrochemicals and electronics. More inbound investment also boosts the currency.
  • Market sentiment – In times of geopolitical uncertainty and risk aversion, traders tend to buy safe haven currencies like the U.S. dollar, weighing on the won.
  • Political instability – Threats from North Korea, domestic political unrest or leadership changes can weaken the KRW by introducing uncertainty.
  • Relative interest rates – Interest rate differentials between South Korea and other major economies impacts currency flows and the won exchange rate.
  • Government policy – Fiscal stimulus programs, foreign exchange interventions and capital controls can all influence KRW trading.

Long-Term Outlook for the South Korean Won

Despite short-term volatility, the long-term outlook for the South Korean won remains positive. Here are some factors supporting KRW strength over the next decade:

  • Korea’s status as a leading exporter of high-tech goods with globally competitive companies like Samsung, Hyundai and LG.
  • The won benefits from South Korea’s large current account surplus driven by a structural trade surplus.
  • South Korea’s sizable foreign exchange reserves provide stability and intervention tools for the central bank.
  • An innovative economy focused on robotics, electric vehicles, semiconductors and next-generation displays.
  • The potential for peaceful relations and eventual reunification with North Korea.
  • Korea’s emergence as a global pop culture leader helps drive tourism and economic growth.

However, demographics present a long-term challenge. South Korea’s rapidly aging population threatens to dampen GDP growth and weaken the won over time. Still, strong fundamentals should keep the KRW as a top Asian currency.

Trading the Won in the Forex Market

For traders, the won presents an opportunity to profit from the rise of the Korean economy. Here are some tips for trading KRW:

  • Follow South Korean and Asian economic data closely for trading signals.
  • Watch for won reactions to Chinese data like industrial production given China is Korea’s largest trading partner.
  • The won-yen cross rate reflects relative growth in the two economies.
  • Use technical analysis and chart patterns to identify trading opportunities.
  • Implement stop-loss orders and risk management given the potential for volatility.
  • Keep an eye on the KOSPI stock market index for signs of investor sentiment towards Korea.
  • Consider hedging won exposure using currency options and forwards.

Trading the won provides great exposure to Asia’s fourth largest economy. But always use prudent risk practices given periodic volatility and interventions.

Summary of Key Points

To summarize, here are the key points covered in this in-depth look at the South Korean won:

  • Official currency of South Korea, 13th most traded currency globally
  • Introduced in 1953, pegged to the U.S. dollar until 1962
  • Floated freely starting in 1997 after Asian financial crisis
  • Freely traded today, occasional central bank intervention
  • KRW currency code, banknotes from 1000 to 50,000 won
  • Key drivers are interest rates, economic growth, exports, inflation
  • Long-term outlook positive given strong fundamentals
  • Trade Won using Korean/Asian economic data and technical analysis

The won has come a long way from the 1997 crisis to stability today. By understanding what moves the South Korean currency, traders can benefit from this vital Asian economic engine.