KRW & EUR - Markets & outlook
South Korean won - KRW:
The US imposed a 25% reciprocal tariff rate on goods from South Korean as part of Trump’s growing trade war with countries around the world.
The outlook for emerging Asian currencies is worsening again after US President Donald Trump announced a raft of new tariffs globally, curbing optimism that his threats were mainly bargaining ploys.
Martial Law Crisis
South Korean President Yoon Suk Yeol’s brief imposition of martial law in early December triggered a political crisis, with the opposition demanding his impeachment and treason charges.
The move sparked widespread protests, drawing parallels to the nation’s authoritarian past, and blindsided his party, the public, and international allies like the US. The fallout has not only destabilized domestic politics but also raised concerns about South Korea’s sovereign-debt rating and heightened volatility for the won amid fears of prolonged political deadlock.
However, South Korea’s won quickly pared its losses against the U.S. dollar following the swift passage of a parliamentary resolution calling for the lifting of martial law.
Euro - EUR:
The Euro (EUR) is the official currency of the Eurozone, used by 20 European Union (EU) countries, making it one of the most widely traded and influential currencies in the world. As the second most traded currency after the US dollar, the euro plays a central role in global financial markets and is driven by economic performance, monetary policy, political stability, and global market sentiment.
The ongoing war in Ukraine has had a significant impact on the euro’s stability and trading patterns, as the European Union remains deeply affected by the geopolitical and economic consequences of the conflict. Sanctions on Russia, disruptions in energy supplies, and shifts in global trade have created uncertainty for the Eurozone economy, leading to fluctuations in the euro’s value. The energy crisis of 2022–2023, triggered by reduced Russian gas exports to Europe, led to inflationary pressures and a slowdown in economic growth, which weighed on the euro. As the war continues into 2025, EU financial and military support for Ukraine, reconstruction efforts, and broader geopolitical tensions will remain key factors influencing the euro’s performance. A prolonged conflict or escalation could lead to further market volatility, while a resolution or stabilization may restore investor confidence in the euro and support its recovery.
Unlike commodity-driven currencies like the Australian dollar (AUD) or Canadian dollar (CAD), the euro’s value is primarily influenced by macroeconomic indicators and policy decisions from the European Central Bank (ECB). Interest rate decisions, inflation targets, and quantitative easing programs by the ECB have a direct impact on the euro’s strength. When the ECB raises interest rates to curb inflation, the euro tends to appreciate, while lower rates or stimulus measures weaken the currency.
The euro’s performance is also shaped by the economic health of the Eurozone’s largest economies, particularly Germany, France, Italy, and Spain. Strong economic growth, high employment, and rising consumer spending tend to boost demand for the EUR, while economic slowdowns, recessions, or crises in major member states can weaken the currency. The euro is also highly sensitive to political events, such as elections, policy shifts, and EU-wide economic reforms. Periods of instability—such as the Greek debt crisis or uncertainty surrounding EU membership—can create significant volatility in the currency markets.
The EUR/USD currency pair is the most traded pair globally, meaning the euro’s value is often influenced by movements in the US dollar. When the USD strengthens, the euro typically declines, and vice versa. Global risk sentiment also plays a role, with the euro often viewed as a stable and reserve currency, though investors may shift to the US dollar or Swiss franc in times of financial uncertainty.
Looking forward, the euro’s trajectory will depend on ECB monetary policy, inflation control, economic recovery, and political stability within the EU. As the Eurozone navigates challenges such as energy market shifts, trade agreements, and digital currency adoption, these factors will continue to shape the strength and global demand for the euro in the years to come.
