KRWZAR: When Two Weak Links Collide—Why the Won Lost Its Tug-of-War with the Rand

In the FX wilderness, the South Korean won and South African rand are rarely cast as titans. Yet over the past three months, their duel has produced a clear victor: KRWZAR has slid a striking -7.7%. The question is not just who lost, but why—when both contenders faced headwinds, one fell harder.

Two Currencies, One Tipping Point

The past quarter has been a lesson in relativity. The South Korean won, battered by trade turbulence and capital flight, met a rand buoyed—ironically—by its own modest stability and the enduring pull of global commodities. In a world where investors seek the least-wobbly boat, South Africa’s inflation at 3.6% (October 2025) and steady hands at the central bank (repo rate near 8.25%) looked almost enviable next to Korea’s gathering storm clouds.

The Won’s Dilemma: Export Engines Sputter

South Korea’s export prowess—semiconductors, autos, shipbuilding—has long been its currency’s engine. But 2025 delivered a sputter. Exports growth slowed to 1.8% (down from 2.2%), and domestic consumption barely filled the gap. Semiconductor shipments, once the pride of Korea, lost momentum as global tech demand hit a plateau. The result: the won weakened to 1,407 per dollar, a 6.05% depreciation versus the greenback over twelve months, and a currency that simply couldn’t outmuscle the rand.

Interest Rate Chess: The Fed, the BOK, and Capital on the Move

Here’s the heart of the matter: the U.S. Federal Reserve’s high-wire act. Even with a modest 0.25% cut in September, the Fed funds rate towers at 4.00–4.25%, dwarfing Korea’s Bank of Korea base rate of 2.50%. Foreign capital didn’t need a second invitation—it streamed out of Korea, seeking juicier returns, and left the won exposed. A rumored 25bps BOK rate cut later this year only widened the chasm.

South Africa, by contrast, held its nerve. The South African Reserve Bank kept its policy rate at 8.25%, offering enough carry for yield-hungry investors to overlook perennial risks. The rand, while never a paragon of stability, looked relatively sturdy in the FX pecking order.

Commodities: The Unsung Hero in the Rand’s Corner

Global commodities threw the rand a lifeline. Gold, platinum, and coal prices remained robust, cushioning South Africa’s trade balance against the worst shocks. The country’s commodity-price index stayed elevated since mid-2020, helping exports and attracting capital that might otherwise flee. For Korea, no such windfall: steel and chip exports met with stiffening global tariffs, and China’s competitive surge gnawed away at margins.

Politics and Policy: A Risk Premium for the Peninsula

South Korea’s political currents added to the won’s woes. President Lee Jae-Myung’s administration signaled policy uncertainty, especially around trade and tariffs. The threat of U.S. protectionism—and new tariffs as high as 145% on selected Asian goods—added a risk premium Korean assets couldn’t shake. Net FX interventions by the Bank of Korea—selling US$800 million in Q2—proved little more than a speed bump.

Meanwhile, South Africa’s politics—though hardly serene—had already been priced in. High unemployment, service delivery woes, and coalition government jostling were less of a shock than Korea’s new volatility.

Safe-Haven Games: When Everyone Runs for Cover

Global risk-off episodes in September and October saw investors run for the exits—into the U.S. dollar, yen, and Swiss franc. But the won, long considered a “risk-on” Asian currency, found itself at the bottom of the pecking order. The rand, bolstered by commodity cushions and a central bank unwilling to blink, simply fell less.

The Macro Symphony: Why the Won Played Second Fiddle

In short, KRWZAR’s -7.7% retreat wasn’t about South Africa’s strength—it was about Korea’s vulnerabilities exposed by a shifting global score. The won’s export machine faltered, capital headed elsewhere, and political tremors shook confidence. The rand, with a little help from gold and platinum, and a central bank that kept its foot on the brake, lost less altitude in the turbulence.

The lesson? In currency markets, you don’t have to be the fastest runner—you just can’t be the slowest when the bears come out. For now, the won is limping at the back of the pack.