Korean Won (KRW) Overview and History in 2025 – Current Exchange Rate and Insights

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What Is the Korean Won (KRW)?

The Korean won (KRW) is South Korea's official currency, represented by the symbol "₩." Fully convertible, the won is actively traded against major currencies like the U.S. dollar (USD), Japanese yen (JPY), and euro (EUR). One won is subdivided into 100 "jeon."

As of January 2024, the exchange rate stands at approximately 1,325 KRW per 1 USD.

Key Highlights

• The Korean won is South Korea's national currency with a history spanning thousands of years.
• It has undergone several reforms due to historical events including war and economic shifts.
• Managed by the Bank of Korea since 1950, the won is a stable and widely traded currency.
• South Korea's advanced economy underpins the won's international significance.

Historical Background of the Korean Won

The won has ancient origins but was replaced temporarily by the Korean yen during Japanese occupation (1910–1945). After World War II and the division of Korea, both North and South Korea issued currencies named won, initially pegged to the USD at 15 won per dollar. The Korean War and subsequent economic challenges led to multiple devaluations.

Since 1950, the Bank of Korea has served as the central authority issuing currency and managing monetary policy.

Notable Facts

Banknotes range from 1,000 to 50,000 won, featuring historic figures from the Yi or Chosŏn dynasty, such as Yi Hwang on the 1,000-won note, Yi I on the 5,000-won note, and King Sejong on the 10,000-won note.

In the 1980s, South Korea shifted from a dollar peg to a currency basket to enhance the won's role in international trade. The Asian Financial Crisis in the late 1990s prompted the won to adopt a free-floating exchange rate system.

The Korean Won and South Korea's Economy

South Korea boasts one of Asia's largest economies, heavily driven by a service sector that accounts for about 56% of GDP. The manufacturing sector, especially semiconductors and automobiles, also plays a vital role, contributing roughly 32% of GDP as of 2022.

The won has maintained relative stability over the past decade, with the USD to KRW rate moving from 1,117 in February 2011 to around 1,304 in December 2023.

Inflation in South Korea has fluctuated, dropping to 0.54% in 2020 before rising to 3.42% in 2023. The country’s economy has grown at an average annual rate of 2.8%, with per-capita GDP (PPP) increasing from $29,644 in 2009 to $50,330 in 2022.

Understanding Central Banking and Inflation

The Bank of Korea, as the central bank, regulates interest rates and money supply to maintain economic stability. Inflation is tracked via a basket of goods and services, helping policymakers gauge price trends.

Currency Convertibility Explained

The won’s full convertibility means it can be exchanged freely with other currencies without significant restrictions, facilitating international trade and investment.

Summary

The Korean won is a historically rich and economically significant currency, underpinning South Korea’s status as a global economic powerhouse. With a current exchange rate near 1,325 KRW per USD in early 2024, it remains a key player in global currency markets, reflecting the strength and resilience of South Korea’s economy.

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