The KRW/JPY exchange rate hit the 850 won range: It wasn't the Yen, it was the Won that moved

I had kept my exchange rate app notifications on silent for two months. When news broke in early August that “the US and Japan intervened in the yen market together,” I assumed it was just a yen-related issue and ignored it. My perspective shifted due to a single news headline on August 13: the KRW/JPY rate had hit 887.84 won per 100 yen, the lowest level since July 2024.

That number was not the bottom. By the end of August, the KRW/JPY rate fell further into the 853 won range. Even though both countries poured tens of trillions of won to save the yen, it was the Korean won that moved more significantly than the yen. I arranged the articles from the last few weeks in chronological order. The intervention only created a rebound for a few days in early August; the subsequent strength of the won was the result of an overflow of dollars within the domestic market.

The US-Japan joint intervention: What happened in late July?

This was an event where Japan, pushed to its limits, sold dollars and bought yen. It started with oil prices. In early June, concerns over armed conflict between the US and Iran sent global oil prices soaring, and the KRW/USD exchange rate climbed to 1,561.5 won during trading on June 8. It was the highest level in 17 years and 3 months since the 2009 financial crisis.

The yen was in a more urgent state. In late July, the USD/JPY pair neared 164 yen in the New York market, marking the weakest yen in about 40 years. Unable to absorb the cost of import prices, the Japanese government and the Bank of Japan began intervening to buy yen on the night of July 30, and the Japanese Finance Minister officially acknowledged the intervention in coordination with the US Department of the Treasury. It was the first time in 28 years since the 1998 Asian financial crisis that the US directly intervened in yen buying, and the first joint US-Japan intervention in 15 years since the response to the Great East Japan Earthquake.

It was costly. The Nihon Keizai Shimbun and others estimated the scale of intervention at 6 to 7 trillion yen, or 55 to 64 trillion won, based on changes in the Bank of Japan’s current account balances. The USD/JPY pair, which had been in the 163 range, fell to the 157 range in a single day, and speculative short positions on the yen decreased by 72% in one week. This was the largest decline since related statistics began to be compiled in 1992.

The effect was short-lived. By mid-August, the USD/JPY pair slipped back to the 157–160 range. Analyses from outlets like E-Today suggested that given Japan’s expansionary fiscal policy and low growth potential, a trend-based rebound for the yen is difficult, and observed that there wasn’t much room for further intervention.

The Yen weakened again, so why did the Won remain strong?

The force pushing up the won wasn’t the yen, but domestic dollar supply and demand. Immediately after the intervention, on August 3, the KRW/USD rate fell to the 1,420 won range, following the yen. Up to this point, it was the synchronization everyone expected. The strange part came afterward. Even after the yen returned to a weak trend, the won did not stop, and on August 19, the KRW/USD broke into the 1,300 won range (1,388.5 won intraday) for the first time in 11 months. On August 21, it closed at 1,386.5 won (1,380.3 won intraday).

During that time, the market was flooded with dollar selling by exporters, known as “nego” volume. A Global Economic report noted that companies earned significant dollars from the semiconductor export boom, and this coincided with schedules requiring won, such as corporate tax prepayments. There was also an analysis that exporters, who usually sold dollars at the end of the month, changed their strategy to sell volume on a regular basis. The Bank of Korea’s decision on August 27 to raise the base interest rate from 2.75% to 3.00% is also cited as a factor supporting the won.

There was one thing that stood out. During the same period, US long-term Treasury yields fell, making the dollar itself weak. If the dollar is weak, the yen should normally rise. However, the yen actually pushed toward the 160 mark. If both currencies faced the same “weak dollar” wind but moved in different directions, the difference was their domestic circumstances. In Japan, expansionary fiscal policy and low interest rates were suppressing the yen, while in Korea, export proceeds were pouring into the won. The Korea Economic Daily pointed out that the synchronization between the won and yen began to break as early as July, when SK Hynix issued American Depositary Receipts (ADRs). The August “nego” volume essentially widened the gap that was already forming.

In summary, the strength of the won in early August followed the yen, but after mid-August, the won ran on its own. It is not because the Korean economy suddenly improved. It is the result of a combination of the yen’s reversal, US-Japan policy coordination, and dollar selling by exporters.

The KRW/JPY in the 850 won range: How much difference does it make for Japan travel currency exchange?

If you exchange 1 million won into yen, you get over 10,000 yen more than you would have in June. According to the Korea Economic Daily, the KRW/JPY exchange rate, which averaged 950 won in June, fell to 853.77 won based on the closing price on August 31. In two months, the value of the won per 100 yen has risen by about 10%.

Doing the math makes it feel real. When exchanging 1 million won, at 950 won per 100 yen, you get about 105,000 yen; at 887.84 won on August 13, you get about 112,600 yen; and at 853.77 won on August 31, you get about 117,100 yen. The difference between 950 won and 853.77 won is about 11,800 yen—the price of two or three dinners in Japan. However, this is calculated based on the base rate; you will receive slightly less when buying cash at a bank counter due to commissions.

This number did not hold. On September 9, the KRW/JPY base rate rose to 873.15 won. This means it has hit bottom and is in the process of rebounding. If you are planning to exchange currency, it is better to exchange it in installments according to your schedule rather than all at once.

After the Bank of Japan’s September rate hike, is the Won’s strength over?

The Bank of Japan raised its policy rate from 1.0% to 1.25% on September 18. This was as Governor Ueda had signaled in early September, stating that they would discuss rate hikes at every meeting, including September. It was an additional hike three months after raising it from 0.75% to 1.0% in June, and 1.25% is the highest level in 31 years since 1995. The vote was 7 to 2, with 2 out of 9 committee members dissenting.

However, the yen remained weak even after the hike. As the weakness continued after the announcement, there were reports that Japanese authorities had engaged in a “rate check,” verifying exchange rate levels with market participants. This is a move considered to be the stage immediately preceding actual intervention. On the won side, the KRW/USD closed at 1,381.0 won on September 21, and even on this day, the decline was led by exporters’ “nego” volume ahead of the Chuseok holiday. This suggests that the same forces from August were still at work in September.

Therefore, it is more accurate to view the “won’t solo strength” as having slowed down rather than ended. The return of the KRW/JPY from the 850 range to the 870 range is the result of the yen regaining some strength, while the export proceeds that were pushing up the won are still coming in.

Why is the Won’s strength a burden to export companies competing with Japan?

The same number becomes a cost on the other side. For export companies in sectors like automobiles, steel, and machinery that compete with Japanese products on price in overseas markets, the decline in the KRW/JPY is equivalent to a decline in price competitiveness. The price of Korean-made products converted into yen becomes that much more expensive. It is also not a distant issue for logistics managers handling shipping documents at Busan Port.

Paradoxically, the main drivers that made the won strong are also export companies. As companies that earned many dollars from semiconductors sold those dollars, the won rose, and that burden is felt more heavily by other industries that compete with Japan. In my second-half 2026 asset strategy post, I cited yen volatility as a variable for both Korean export companies and the asset market, and it seems that in the past two months, that variable has erupted on the won side first.

It has taken less than three months from the massive weakness of the won caused by the Middle East in June, to the joint US-Japan intervention in late July, the won’s solo run in August, and the Bank of Japan’s hike in September. The fact that exchange rates do not move based on just one country’s circumstances is a point that overlaps with the story discussed in my article on invisible risks. There are two Bank of Japan meetings remaining this year: in October and December.