With the Middle East crisis, high oil prices, and US-China trade disputes threatening to push the won-dollar exchange rate to the 1,500 won mark, a bizarre phenomenon of rising exchange rates despite a trade surplus has occurred, sparking fierce debate among experts over whether this is the 'new normal'.
Imagine this. You finally stop by a bank counter to exchange money for your long-awaited overseas trip. But you can’t believe your eyes when you see the number the clerk hands you. To get your hands on $1,000, which used to cost about 1.1 million to 1.2 million won in the past, you now have to pay well over 1.5 million won. It must feel like hundreds of thousands of won have vanished into thin air right where you sit.
Just a few years ago, such an exchange rate was hard to even imagine. The only times the won-dollar exchange rate crossed the 1,500 won mark in the past were during national emergencies when the entire country’s economy was staggering, such as the 1997 IMF Asian financial crisis or the 2008 global financial crisis.
Recently, however, this terrifying number of ‘1,500 won’ has taken a big step closer to us again. Even more so, it is not a crisis situation where the entire country’s economy is collapsing like in the past. On the contrary, exports of semiconductors, our main export item, are hitting the jackpot day after day. What on earth is going on in the foreign exchange market right now? And should we lightly brush off this unfamiliar and high exchange rate as a ‘passing shower that happens once in a while’, or should we take it heavily as ‘climate change that we must continue to adapt to’?
Why It Matters
Simply put, the exchange rate is the ‘ransom of our money’ (the value of our money). A rising exchange rate means you have to pay more won to buy a $1 item, which in turn means the value of our money has fallen by that much.
We rely on imports for most of the oil (crude oil) we use every day for our cars, food such as flour and meat that goes on our tables, and raw materials that run our factories. Even if we buy the same amount of oil or food, we have to pay much more money to foreign countries than before, so prices at our local supermarkets and gas stations end up rising like dominoes. The pain of skyrocketing food and gas prices begins while our salaries remain the same.
| In fact, this sense of crisis is already sending shockwaves throughout the economy. As trade conflicts intensify, such as the tariff war where the US and China impose high taxes on each other, the KOSPI, a representative index showing the overall situation of the domestic stock market, has plummeted below the 2,300 mark [[‘Exchange Rate in the 1,500s’ Becoming the New Normal… “Ceiling Opened” by Tariff Shock | SBS NEWS]](http://news.sbs.co.kr/news/endPage.do?news_id=N1008056387). This means the accounts of ordinary office workers who invested in stocks are freezing cold. |
Insurance companies, which we signed up for in preparation for emergencies, are also on high alert. The insurance industry is currently facing ‘double pressure’ due to the rising exchange rate. First, the cost of maintaining foreign exchange hedging (avoiding foreign exchange risk), a kind of safety device to prevent losses due to sudden exchange rate fluctuations, has increased significantly. Furthermore, the KICS (Korean Insurance Capital Standard) ratio is also dropping precipitously. KICS is a key soundness indicator that shows whether an insurance company has sufficient ability to return insurance money to customers on time. According to an analysis by a credit rating agency, it is estimated that for every 100 won increase in the exchange rate, this soundness indicator drops by an average of 1.7% for life insurance companies and 0.6% for non-life insurance companies [Exchange Rate Crossing the 1,500 Won Mark… Insurance Industry Faces ‘Double Pressure’ of FX Hedging Costs and KICS Burden]. When the exchange rate rises, not only do our household expenses increase, but the wallet situations of massive financial companies that are supposed to be our sturdy shields also worsen structurally.
The Explainer
But there is a reason why the current situation is particularly bizarre. The ‘traditional formula’ found in economics textbooks has been completely broken.
To use an analogy, let’s think of dollars as ‘apples’ we enjoy eating. If apples pour into the market by the truckload, the price of the now-common apples should drop normally. Currently, thanks to the semiconductor boom that the world envies, our economic growth rate is soaring, and the current account balance (the total profit left after buying and selling goods or services with foreign countries) is recording the highest surplus ever. In other words, trucks of apples called foreign currency (dollars) are constantly pouring into our country’s market. If so, it is only right that a ‘strong won’ occurs, where the price of the dollar (exchange rate) falls and the value of our money rises.
| However, the reality is exactly the opposite. Despite receiving a solid report card of a record-breaking trade surplus, the exchange rate has skyrocketed dizzyingly to financial crisis levels, shattering the long-standing formula of ‘Trade Surplus = Strong Won’ [[The 1,500 Won Mark, Once Said to Ruin the Country, is the New Normal… The ‘Trade Surplus = Strong Won’ Formula is Broken | Hankyung]](https://www.hankyung.com/article/2026052248641). |
Why on earth is this happening? The reason is that the ‘global typhoon’ blowing from the outer seas is too strong for the sturdy ship called the Korean economy to handle.
| Currently, the eye of the typhoon shaking the global foreign exchange market is largely threefold. First is the military conflict and geopolitical crisis in the Middle East, with no end in sight [Won-Dollar Exchange Rate, Will 1,500 Won Become the ‘New Normal’… Additional Rise if Middle East Instability and High Oil Prices Prolong…]. Second is the high oil price situation, which even shows the risk of surpassing $100 per barrel due to this unstable international situation [Will the 1,500 Won Exchange Rate Become the New Normal]. Third is the fierce trade conflict between the US and China, the two giants of the global economy [[‘Exchange Rate in the 1,500s’ Becoming the New Normal… “Ceiling Opened” by Tariff Shock | SBS NEWS]](http://news.sbs.co.kr/news/endPage.do?news_id=N1008056387). The shocks of wars and conflicts erupting all over the global village are hitting the value of our won particularly hard. On top of this, the selling pressure from foreign investors saying “Let’s unconditionally grab the safest dollar when the world is dangerous” and the global trend of a ‘strong dollar’ (a phenomenon where the dollar’s popularity is overwhelmingly high) are overlapping, exerting a terrifying pressure that pulls the exchange rate upward without giving it a chance to go down [Will the ‘New Normal’ in the 1,500 Won Range Solidify… “Weak Won Value is Not a Temporary Phenomenon” - Maeil Business Newspaper] [[‘War Shock’ Particularly Strong on Won Value… Exchange Rate Crosses the 1,500 Won Mark Again | JoongAng Ilbo]](https://www.joongang.co.kr/article/25411963). |
Where We Stand
| Amidst this omnidirectional external pressure, the 1,500 won exchange rate mark has now become more than just a number for market participants; it has become a ‘psychological Maginot Line’ and a resistance line like a massive dam holding back the rough waves [[Won-Dollar Exchange Rate, Will the 1,500 Won Mark Become the New Normal | Hankyung]](https://www.hankyung.com/article/2026052573401). |
Of course, our government is not just helplessly facing the storm. The government (foreign exchange authorities) is actively intervening and building a defensive shield so that economic subjects do not fall into a panic when this psychological Maginot Line of 1,500 won is completely breached [Exchange Rate Exceeds 1,500 Won in Weekly Trading… “If High Oil Prices Prolong, the 1,500 Won Mark Will Be Fixed…”]. In fact, in recent weekly trading, the exchange rate barely managed to close at 1,497.5 won, up 3.8 won from the previous day, hanging on by a thread [Exchange Rate Exceeds 1,500 Won in Weekly Trading… “If High Oil Prices Prolong, the 1,500 Won Mark Will Be Fixed…”]. Like this, sometimes the government’s strong will to stabilize the foreign exchange market and the market’s expectation that ‘the dollar supply will improve soon’ intertwine, causing the exchange rate, which was fiercely threatening 1,500 won, to quickly show signs of calming down and limiting its upward range [Is a New Normal in the 1,400 Won Range Coming… “Downward Range Limited” Despite Government Measures - Money Today].
| However, because the external winds are so strong, if the shield shows even the slightest gap, the exchange rate fluctuates around the 1,500 won mark again, continuing a precarious tightrope walk on thin ice day by day [[Will the 1,500 Won Exchange Rate Mark Solidify Amidst the Middle East Crisis… Possibility of a ‘New Normal’ | Save Internet…]](https://biz.newdaily.co.kr/site/data/html/2026/03/16/2026031600335.html). |
What’s Next
The biggest topic and everyone’s concern is whether this ‘1,500 won exchange rate’ will not be a passing shower like in the past, but will completely solidify into our new daily life, the so-called New Normal (a new standard or norm that emerges according to the changes of the times). Even among experts studying the economy, predictions are sharply divided over this.
| Those who heavily warn that “This could become the new standard” focus on the fact that the external structural shocks are prolonging too much. Lee Nak-won, an FX derivatives expert commissioner at NH Nonghyup Bank, analyzed, “If international oil prices stay in the $100 per barrel range, the 1,500 won exchange rate could potentially become the ‘new normal’” [Will the 1,500 Won Exchange Rate Become the New Normal]. If the Middle East war surrounding Israel and others does not end dramatically in the short term but is prolonged, oil prices will remain expensive and the ransom of the dollar will not come down. Thus, there is deep concern that the era of high exchange rates, which was considered abnormal in the past, could be fixed as a ‘normal state’ that we have no choice but to accept [[‘War Shock’ Particularly Strong on Won Value… Exchange Rate Crosses the 1,500 Won Mark Again | JoongAng Ilbo]](https://www.joongang.co.kr/article/25411963) [Exchange Rate Exceeds 1,500 Won in Weekly Trading… “If High Oil Prices Prolong, the 1,500 Won Mark Will Be Fixed…”]. |
On the other hand, there are quite a few experts who warn against excessive fear, saying, “Still, 1,500 won will not become a permanent daily routine.” Min Kyung-won, a researcher at Woori Bank, provided a relatively stable diagnosis, stating, “In 2026, the won-dollar exchange rate will show a trend of being ‘high in the first half and low in the second half’, gradually lowering,” and “At this point, the possibility of completely breaking through the 1,500 won mark and going up is slim” [Will the Won-Dollar 1,500 Won Mark Be Breached [High Exchange Rate New Normal ②] :: Gonggam Press Newsis ::]. Jang Min, a senior research fellow at the Korea Institute of Finance, also analyzed, “It is difficult to see the won-dollar exchange rate approaching the 1,500 won range as a structural new normal.” He interpreted that the current situation is just a temporary shock where the ship is shaken by a big external wind, not a permanent change in the constitution or a catastrophe of our economy [[[Economic Issue] Won-Dollar Exchange Rate 1,500 Won, Is it the New Normal : Monthly Chosun]].
AI’s Take
From the perspective of MindTickleBytes’ AI reporter, the current high exchange rate phenomenon strongly suggests that the South Korean economy has entered a completely new phase where we can no longer feel at ease just looking at the formula tables of the past.
No matter how well we make good semiconductors and cars and hit the export jackpot, we cannot protect our food prices with that alone. This is because we live in a massive hyper-connected era where a single missile flying from the other side of the globe and complex trade conflicts and tariff barriers of superpowers dictate the grocery prices and loan interests of ordinary citizens.
The unfamiliar number of 1,500 won may not solidify as an unchanging ‘new normal’ starting tomorrow. After all, the economy always has an inertia to recover. But the important lesson is clear. Without efforts to fundamentally improve the basic physical strength of the national economy so that it can firmly withstand global geopolitical storms, the Maginot Line of the exchange rate can be shaken like a sandcastle at any time. Now, rather than simply alternating between joy and sorrow over fluctuating ‘numbers’, it is time to open our eyes to the massive tectonic shifts in the global economy that the numbers warn of and calmly check our economic situation.
References
- Will the ‘New Normal’ in the 1,500 Won Range Solidify… “Weak Won Value is Not a Temporary Phenomenon” - Maeil Business Newspaper
- Won-Dollar Exchange Rate, Will 1,500 Won Become the ‘New Normal’… Additional Rise if Middle East Instability and High Oil Prices Prolong…
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[‘Exchange Rate in the 1,500s’ Becoming the New Normal… “Ceiling Opened” by Tariff Shock SBS NEWS](http://news.sbs.co.kr/news/endPage.do?news_id=N1008056387) - Exchange Rate Crossing the 1,500 Won Mark… Insurance Industry Faces ‘Double Pressure’ of FX Hedging Costs and KICS Burden
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[Will the 1,500 Won Exchange Rate Mark Solidify Amidst the Middle East Crisis… Possibility of a ‘New Normal’ Save Internet…](https://biz.newdaily.co.kr/site/data/html/2026/03/16/2026031600335.html) - Will the 1,500 Won Exchange Rate Become the New Normal
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[‘War Shock’ Particularly Strong on Won Value… Exchange Rate Crosses the 1,500 Won Mark Again JoongAng Ilbo](https://www.joongang.co.kr/article/25411963) - Exchange Rate Exceeds 1,500 Won in Weekly Trading… “If High Oil Prices Prolong, the 1,500 Won Mark Will Be Fixed…”
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[Won-Dollar Exchange Rate, Will the 1,500 Won Mark Become the New Normal Hankyung](https://www.hankyung.com/article/2026052573401) - Will the Won-Dollar 1,500 Won Mark Be Breached [High Exchange Rate New Normal ②] :: Gonggam Press Newsis ::
- [Economic Issue] Won-Dollar Exchange Rate 1,500 Won, Is it the New Normal : Monthly Chosun
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[The 1,500 Won Mark, Once Said to Ruin the Country, is the New Normal… The ‘Trade Surplus = Strong Won’ Formula is Broken Hankyung](https://www.hankyung.com/article/2026052248641) - Is a New Normal in the 1,400 Won Range Coming… “Downward Range Limited” Despite Government Measures - Money Today
- The value of the won is falling despite the semiconductor boom and record-breaking trade surplus.
- The exchange rate is rising despite falling international oil prices.
- Foreign investors are buying Korean stocks in large quantities.
- KOSPI (Korea Composite Stock Price Index)
- KICS (Korean Insurance Capital Standard)
- IMF (International Monetary Fund)
- Interest rate cuts in the US
- Decline in semiconductor exports
- International oil prices remaining in the $100 per barrel range