Korean won slides as U.S., Iran spar over ceasefire terms

Lead

The South Korean won has seen volatile trading against the U.S. dollar over recent weeks, with movements closely tied to the evolving ceasefire negotiations between the United States and Iran. According to multiple reports from Yonhap News, the currency initially strengthened sharply after the two nations agreed to a two-week truce, but later weakened as talks stalled and regional tensions persisted.

Coverage Comparison

Reports from Yonhap News covering different dates illustrate a clear pattern: the won's performance has mirrored the perceived progress—or lack thereof—in U.S.-Iran diplomacy. On April 8, the won strengthened sharply, with one report noting it opened at 1,479.9 per dollar, up 24.3 won, after President Donald Trump announced a conditional two-week ceasefire. Another report from the same day quoted the currency at 1,470.6, up 33.6 won, marking its strongest level since March 11.

However, by April 9, the trend reversed. Two separate articles describe the won falling against the dollar as the U.S. and Iran "wrangled over the terms" of the ceasefire. The currency closed at 1,482.5 per dollar, down 11.9 won, with Israel vowing to continue its offensive against Lebanon and Iran threatening to close the Strait of Hormuz again.

By April 10, reports were mixed. One article noted the won strengthened, supported by Israel's signal that it would hold talks with Lebanon. Another said the won remained flat, with markets awaiting upcoming U.S.-Iran talks in Islamabad.

The most severe decline came on April 22, when two reports describe the won falling sharply as peace talks stalled. U.S. Vice President JD Vance postponed a planned trip to Pakistan for a second round of talks, and the two-week ceasefire was set to expire, though Trump announced an extension without specifying a timeframe. The won opened at 1,479.5 per dollar, down 11 won, retreating from a one-month high.

By April 29, the won rose only slightly, trading at 1,475.0 per dollar, amid the UAE's decision to exit OPEC, while the Strait of Hormuz remained blocked and oil prices continued to rise.

Key Claims

• A two-week ceasefire between the U.S. and Iran was agreed upon in early April, with Trump saying he would refrain from attacking Iran on condition that Iran reopens the Strait of Hormuz, as reported by multiple Yonhap articles.
• Iran agreed to reopen the waterway provided attacks against it were halted, according to foreign media reports cited by Yonhap.
• The ceasefire's terms were not immediately formalized, with the U.S. and Iran set to meet over the weekend of April 10-11 to finalize them, per Yonhap.
• Israel vowed to continue its offensive against Lebanon, insisting it was not subject to the ceasefire, as reported by Yonhap.
• Iran threatened to close the Strait of Hormuz again, citing Israeli attacks on Lebanon, according to Yonhap.
• A single report from April 10 noted that Israeli Prime Minister Benjamin Netanyahu had authorized direct talks with Lebanon "as soon as possible," a claim not repeated in other coverage reviewed.
• The two-week ceasefire was set to expire around April 22, but Trump announced an extension without a specified timeframe, according to two Yonhap reports.
• U.S. Vice President JD Vance postponed his planned trip to Pakistan for a second round of talks with Iran, as Tehran had not responded to U.S. positions, according to foreign media reports cited by Yonhap.
• The UAE decided to exit OPEC in May, a move some analysts expected to weaken oil price rises, but oil prices continued to climb, as noted in an April 29 Yonhap report.

Perspectives

Market impact: The won's movements were consistently linked to oil prices and the dollar index. Higher oil prices tend to weigh on the won by increasing demand for dollars for crude imports, as South Korea relies heavily on overseas energy supplies. Analysts quoted by Yonhap, such as Lee Yoo-jung at Hana Bank, noted that easing Middle East tensions calmed risk-off sentiment, while renewed friction heightened volatility.

Geopolitical context: The U.S.-Iran conflict, which began in late February following U.S.-Israeli strikes on Iran, has escalated into a broader regional confrontation. Yonhap reports consistently describe the situation as rattling global markets and driving up oil prices, with the Strait of Hormuz effectively shut. Israel's stance on Lebanon and Iran's threats to close the strait were cited as factors undermining the ceasefire.

Future outlook: A Bank of Korea official, Governor Rhee Chang-yong, was quoted as saying the won could strengthen "quickly" to pre-conflict levels if the Middle East situation stabilizes. However, reports from late April suggest that stabilization remains elusive, as talks stalled and oil prices remained elevated.

Note: All information is based on Yonhap News English-language articles covering the period from April 8 to April 29. No other outlets were available for comparison.