South Korea’s Won Slides to Eight-Month Low on Foreign Stock Outflows

The South Korean won (KRW) has dropped to its lowest level since April 9, 2025. The won weakened to around 1,482.25 per dollar on Wednesday, reportedly falling at around 0.6%, marking its weakest level in eight months. According to analysts, foreign fund outflows from local stocks and steady dollar demand are key factors behind the drop. The foreign funds continue to pull money from South Korean stocks, fueling outflows that put pressure on the won and weaken it. Market experts observe that the trend occurs amid broader economic strains such as weak exports, slowing growth, and persistent dollar demand supported by higher U.S. interest rates. 

South Korea is struggling to defend its currency as continuous foreign stock outflows, along with domestic retail and pension fund investments moving abroad, have created heavy selling pressure on the won. According to the latest data, the won has slid more than 8% against the dollar, making it one of the worst-performing currencies in Asia. Brad Setser, an American economist and senior fellow at the Council on Foreign Relations (CFR), responded and stated in an X post that South Korea was struggling to defend its currency as continuous foreign stock outflows, along with domestic retail and pension fund investments moving abroad, had created heavy selling pressure on the won.

South Korea’s state-run pension fund has indicated that it will take a substantial role in ensuring the won’s stability by becoming more flexible with hedging. Bloomberg reported by quoting Gyeong-Won Min, an economist at Woori Bank, who said that there were NPS hedging flows waiting above 1,480 and that authorities were on alert, meaning there should not be a gap in dollar‑selling supply. He added that the key questions were whether the NPS would actively sell dollars, how far authorities would go with direct intervention, and whether year‑end conversion flows from exporters would materialize. 

Experts believe that the weakening of the South Korean currency puts pressure on both bonds and equities. According to them, a falling won is likely to raise import costs, leading to stoking inflation fears. This will also lead to governments and corporate bonds losing value, with short-term yields spiking. As of December 16, 2025, the KOSPI dropped 2.24% to 3,999, extending losses as tech tycoons like Samsung Electronics (-0.29% to -2%) and SK Hynix (-1.90% to -4.3%) led declines. The country’s stock benchmark posted gains today, but foreign investors continued selling for a third consecutive session. According to the latest information, they have offloaded another $190 million of local equities so far in today’s trading session.