The South Korean won held steady around 1,398 per US dollar on Monday, consolidating gains after touching a five-month high in the previous session. The move comes amid speculation that the Trump administration is pressing regional economies to allow their currencies to appreciate against the US dollar, sparking renewed interest in the Korean won and other Asian currencies.
At home, economic indicators delivered a mixed message. Consumer inflation remained unchanged in April, supporting the Bank of Korea’s recent decision to keep its policy rate steady. The central bank has been walking a tightrope between controlling inflation and fostering conditions for economic growth, and the flat inflation print gives policymakers more room to navigate the challenging global backdrop.
In a bright spot for the economy, South Korea’s trade surplus widened significantly last month. Preliminary data showed a surprise uptick in exports despite reduced shipments to the United States, which have been pressured by aggressive US tariffs. Imports also declined, but by less than anticipated, helping push the surplus higher and easing some concerns about external demand resilience.
However, not all signals were positive. South Korea’s manufacturing sector continued to struggle, with the latest manufacturing Purchasing Managers’ Index (PMI) falling to 47.5 in April from 49.1 a month earlier. This marked the third straight month of contraction and the steepest decline since September 2022, raising concerns about the health of the country’s industrial base amid ongoing global uncertainty and weakening demand from key markets.
Together, the data paint a picture of an economy navigating both external shocks and internal structural headwinds. While the currency and trade position offer near-term strength, continued weakness in manufacturing could challenge growth momentum in the quarters ahead. Investors and policymakers alike will be closely watching how the Bank of Korea responds if these mixed signals persist.
