SEOUL
South Korea’s currency, the won, plummeted to a 17-year low yesterday as fears of a widening war in the Middle East rattled global markets. The currency dropped sharply to 1,530.1 won against the US dollar, marking its weakest level since the global financial crisis of 2009.
The economic slide is being fueled by a dangerous mix of rising oil prices and geopolitical “sabre-rattling.” Recent threats by U.S. President Donald Trump to target Iranian oil hubs have sent crude prices soaring above $100 a barrel. Because South Korea imports nearly all of its energy, these high prices force the country to spend more US dollars, putting immense pressure on the local currency.
Adding to the drama, Iran has suggested it might charge a “toll” for ships passing through the Strait of Hormuz, a vital route for world oil. This uncertainty has scared international investors, who are pulling their money out of the Korean stock market at a record pace. Yesterday alone, foreign investors sold off over 3.8 trillion won worth of shares, causing the KOSPI stock index to dive more than 4 percent.
South Korea’s central bank is now on high alert. Officials stated they are monitoring the situation closely and are prepared to step in if the won’t slide becomes too “one-sided.” For now, the combination of expensive fuel and fleeing investors has left the nation’s economy facing its toughest challenge in nearly two decades.
