Seoul: The South Korean won strengthened against the U.S. dollar to a one-month high on Tuesday, fueled by optimism surrounding potential peace talks between the United States and Iran, as well as robust foreign investment in South Korean equities. The won was quoted at 1,468.5 per dollar at 3:30 p.m., marking an increase of 8.7 won from the previous session and continuing its upward trend for a second straight day. This level is the strongest since March 11, when the won closed at 1,466.5.
According to Yonhap News Agency, the currency's gain follows U.S. President Donald Trump's announcement that Vice President JD Vance will travel to Islamabad for a second round of discussions with Iran aimed at resolving their ongoing conflict. Although the initial round of talks earlier this month did not yield an agreement, there is cautious optimism about the upcoming negotiations. The current two-week ceasefire between the two nations is due to expire this week, adding a sense of urgency to the diplomatic efforts.
In addition to diplomatic developments, falling global oil prices also bolstered the won, with Brent crude oil prices dipping about 1 percent to $94.44 per barrel. The drop in oil prices provided some relief to the won, which has experienced increased volatility due to the conflict originating from U.S.-Israeli strikes on Iran in late February. These events have led to rising global oil prices, which in turn have raised concerns about inflation and a potential economic slowdown.
The won typically faces pressure when oil prices rise, as South Korea, heavily reliant on energy imports, sees increased demand for dollars to pay for crude imports. Meanwhile, strong foreign buying of South Korean shares has supported the won's strength. The Korea Composite Stock Price Index rose 2.72 percent to reach a record high of 6,388.47, driven by investor confidence.
Despite the strengthening won, the dollar index, which gauges the U.S. currency against six major currencies, saw a marginal increase of 0.04 percent to 98.14.