South Korea’s won has spent the past several years on a steady downward drift, losing ground not only against the US dollar, but also against the currencies of many of its major trading partners.

Each time the exchange rate approaches levels that unsettle policymakers, government officials and the Bank of Korea repeat familiar assurances: that they are watching markets closely, that fundamentals remain strong, and that excessive volatility will be addressed.

Occasionally, authorities step in to smooth fluctuations. Yet despite these efforts, the currency continues to weaken, largely indifferent to official statements. This is neither an ordinary swing in market sentiment nor does it resemble the temporary bouts of weakness that Korea has weathered in past global downturns.

The persistent softness of the won today reflects a convergence of deeper factors, such as widening interest-rate differentials with the United States, sustained capital outflows from Korean institutions and households, a slowing domestic economy, episodes of political volatility

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