The USD/KRW exchange rate has shown notable volatility recently, reflecting a complex interplay of domestic and international factors. As of December 2025, the KRW has depreciated significantly to around 1,472.5 per USD, the highest level since the 1997 financial crisis. This decline has been attributed to ongoing domestic political instability in South Korea and challenging external economic conditions. Analysts point to inflation concerns that accompany a weaker won, with the Bank of Korea warning that consumer prices may rise if the currency remains under pressure.
Recent forecasts from Barclays suggest that the USD/KRW exchange rate may oscillate between 1,350 and 1,400 as opposing market forces come into play. These projections reflect the expectation of a downward trend for the won in response to potential overseas pressures and domestic economic adjustments.
On the U.S. side, the dollar has lost traction following a surprising drop in U.S. inflation from 3% to 2.7%, diminishing expectations for aggressive Federal Reserve rate hikes in the near term. The markets are pricing in multiple rate cuts beginning as early as March 2026, which is impacting the dollar’s relative strength. Dovish signals from the Fed have led analysts to consider the likelihood of a weaker dollar, especially as supportive economic data remains mixed, highlighting cooling manufacturing metrics alongside resilient employment figures.
The current KRW/USD rate at approximately 0.000693 is slightly above its three-month average, displaying a stable range confined within 5.8% from 0.000675 to 0.000714. This indicates a period of relative stability for the KRW, despite the overarching pressures influencing its valuation.
Looking ahead, the performance of the KRW is likely to remain closely tied to developments in both domestic policies and broader economic trends in the U.S. Market participants should monitor upcoming U.S. inflation data and consumer sentiment indicators, as these will significantly influence the dollar’s trajectory and consequently the USD/KRW exchange rate.
