Seoul: The South Korean won strengthened against the U.S. dollar on Friday, rebounding from a steep decline in the previous session, as talks on reopening the Strait of Hormuz showed signs of progress amid a prolonged conflict in the Middle East. The won was quoted at 1,505.2 per dollar, marking an increase of 14.5 won from the previous session.
According to Yonhap News Agency, investors remained on edge due to escalating tensions in the Middle East. U.S. President Donald Trump, in a prime-time address on Wednesday, issued a stern warning that the United States would hit Iran "extremely hard over the next two to three weeks" and threatened to "bring them back to the Stone Age," although he did not specify a timeline for ending the conflict. This warning dampened hopes for a swift resolution to the monthlong conflict, which has led to rising oil prices due to supply disruptions and heightened fears of inflation and a potential economic slowdown.
In a hopeful development, Iran's Deputy Foreign Minister Kazem Gharibabadi announced that Tehran is drafting a protocol with Oman to monitor maritime traffic through the Strait of Hormuz. This raised hopes for progress in reopening the strategic waterway, which has effectively been shut since the start of the war in late February.
The benchmark Korea Composite Stock Price Index (KOSPI) reflected the optimistic sentiment, rising 2.74 percent to close at 5,377.3 on Friday. Finance Minister Koo Yun-cheol, during a visit to a securities firm branch in Seoul to mark the launch of the reshoring investment account (RIA), stated, "The government has rolled out measures to stabilize the foreign exchange market and foreign exchange supply and demand conditions are expected to improve significantly." The RIA product offers capital gains tax deductions on overseas stocks if investors sell such holdings and invest the proceeds in domestic equities.
Minister Koo further emphasized, "We are closely monitoring volatility in the foreign exchange and financial markets with heightened vigilance, as uncertainty has increased significantly due to the war in the Middle East."