The KRW is struggling right now because of higher tariffs introduced by US President Trump. These tariffs on South Korean imports, including cars, timber, and pharmaceuticals, will jump from 15% to 25%. Even with the tariffs rising, reduced capital outflows are helping to stabilize the KRW. While the economy is feeling the impact of these tariffs, this financial cushion is keeping the currency somewhat steady.

Australian Consumer Price Index Projections

Australia’s Consumer Price Index is expected to increase by 3.6% over the year, up from 3.4% in the last report. The anticipated monthly CPI is 0.7%, after showing no change in November. The US Dollar Index has fallen to its lowest point since 2022. This drop is due to a mix of factors like economic slowdown concerns, diversification, and rumors of foreign exchange interventions. XRP is having a tough time staying above $2.00, despite steady demand from ETFs. It’s currently trading around $1.88 and facing pressure in a weak market. The new US tariffs targeting key South Korean products, like cars and pharmaceuticals, are a clear challenge for the Korean won. This presents a chance to bet on the KRW weakening against the US dollar. Traders might want to think about buying call options on the USD/KRW pair to profit from its expected increase.

US Tariffs And The Korean Won

This tariff situation is important because the US is a vital market for South Korea. Automotive exports alone have exceeded $30 billion a year in recent times. During the trade disputes of 2018-2019, similar tariffs led to significant currency declines and market uncertainty. This historical context suggests the won might drop to weaker levels similar to what we saw during the economic slowdown of 2025. The negative effects of these tariffs will likely reach beyond currency markets and impact South Korean stocks, especially in the KOSPI index. Major exporters like Hyundai and Samsung Electronics are vulnerable to trade disruptions with the US. Therefore, buying put options on the KOSPI 200 index could be a wise move to protect against or gain from a potential market drop. While the outlook is bleak, we should recognize the stabilizing effect of reduced capital outflows, which has kept the won from falling more dramatically. The Bank of Korea has also kept a steady policy, providing some support for the currency. It’s crucial to watch the implied volatility in KRW options; a sharp increase might indicate that this support is starting to weaken. Additionally, it’s worth considering the larger trend of a declining US dollar against other major currencies. This makes the KRW situation unique, suggesting a potential strategy of going long on USD/KRW while shorting the US dollar against a stronger currency, like the euro. The risks posed by these tariffs also heighten the appeal of safe-haven assets, which may explain the recent strength we’ve seen in gold. Create your live VT Markets account and start trading now.

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