South Korean Won Hits 17-Year Low Amid Iran War Fears

The recent escalation of tensions between Iran and the US has sent shockwaves through global markets, with the South Korean won experiencing a significant decline. The won fell to its weakest level since March 2009, reaching 1,511 KRW per dollar.

This phenomenon can be attributed to the increased demand for safe-haven assets as investors seek to mitigate risk. Historically, tether (USDT) has been used by Korean retail investors as a convenient proxy for dollars during times of market volatility.

However, in this instance, USDT is trading at a discount on Upbit, South Korea's largest exchange, with its price hovering around 1,503 KRW – roughly 0.5% below the spot dollar rate. This unexpected development suggests that crypto markets are not participating in the safe-haven trade driving traditional FX.

The rise in geopolitical risk has dampened speculative appetite for cryptocurrencies, leading investors to opt for actual dollars and dollar-denominated assets instead of stablecoin positions. As a result, the kimchi premium on tether has collapsed, signaling a change in market dynamics.