The Korean won plunged to a level not seen since the global financial crisis of 2009, briefly breaching the KRW1,450 mark against the US dollar on December 19. At 11 a.m. local time, the currency was trading at KRW1,449.5 per dollar, recovering slightly from earlier losses but still significantly weaker than the previous session. The drop marked the sharpest depreciation since the KRW1,488  level recorded on March 16, 2009, during the height of the global recession, as reported by Yonhap.

The sharp decline in the won follows a turbulent period for South Korea's financial markets, beginning with President Yoon Suk Yeol's declaration of a brief martial law on December 3. Since then, the currency had hovered around the KRW1,430  level, reflecting growing market uncertainty. The latest plunge was exacerbated by a US Federal Reserve interest rate cut, which prompted further volatility in global currency markets.

The Federal Open Market Committee (FOMC) slashed its benchmark interest rate by a quarter percentage point on December 18, bringing it to a range of 4.25 to 4.50 %. This was the second such reduction in as many months, following a previous rate cut in November and a larger 50-basis-point move in September. Despite the rate cut, US Federal Reserve Chair Jerome Powell indicated that more cuts could follow next year, although at a slower pace than previously expected.

Lee Min-hyuk, an analyst at KB Kookmin Bank, noted that the FOMC’s decision is being seen as "hawkish," suggesting that the US economy may be on a more stable footing than anticipated. For South Korea, this shift has intensified pressure on the won as US rate cuts tend to widen the gap between US and South Korean interest rates, making the dollar more attractive to investors.

In response to the sharp fluctuations, South Korea's Finance Minister Choi Sang-mok warned of heightened volatility in the country’s financial and foreign exchange markets in the short term. He urged market participants to remain composed, assuring that the government and central bank would take swift action to stabilise the market if excessive fluctuations persist.