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The exchange rate between the South Korean Won (KRW) and the Euro (EUR) is a critical indicator for businesses, investors, and policymakers engaged in trade and financial activities between South Korea and the Eurozone. Over the past few months, the KRW/EUR exchange rate has exhibited notable fluctuations, influenced by various economic and geopolitical factors. This report provides an analysis of the recent trends, underlying causes, and potential future movements of the KRW/EUR exchange rate.

Recent Trends in the KRW/EUR Exchange Rate

Between September 2024 and March 2025, the KRW/EUR exchange rate experienced significant volatility. According to data from Exchange Rates UK, the highest rate during this period was €0.00068429 per KRW on October 2, 2024, while the lowest was €0.00063098 per KRW on March 11, 2025. The average exchange rate over these six months was €0.00066702 per KRW. (exchangerates.org.uk)

Conversely, when considering the EUR/KRW exchange rate, the Euro appreciated against the Won. The highest rate recorded was ₩1,568.01 per EUR on March 7, 2025, and the lowest was ₩1,461.40 per EUR on October 2, 2024, with an average rate of ₩1,496.23 per EUR over the same period. (exchange-rates.org)

Factors Influencing the Exchange Rate Movements

Several key factors have contributed to the observed fluctuations in the KRW/EUR exchange rate:

1. Economic Indicators: Disparities in economic performance between South Korea and the Eurozone have played a significant role. For instance, if South Korea's GDP growth outpaces that of the Eurozone, the Won may strengthen against the Euro. Conversely, higher inflation rates in South Korea compared to the Eurozone can lead to a depreciation of the Won relative to the Euro.

2. Monetary Policies: Decisions by the Bank of Korea and the European Central Bank (ECB) regarding interest rates and monetary policies directly impact the exchange rate. An increase in interest rates by the ECB, for example, can attract investors to the Euro, causing the Won to weaken.

3. Trade Balances: South Korea's trade surplus or deficit with Eurozone countries affects demand for the respective currencies. A trade surplus increases demand for the Won, potentially strengthening it against the Euro.

4. Geopolitical Events: Political developments, such as trade agreements or tensions, can influence investor confidence and currency valuations. For example, uncertainties surrounding trade negotiations between South Korea and the European Union can lead to exchange rate volatility.

Historical Context and Long-Term Trends

Historically, the KRW/EUR exchange rate has shown periods of both appreciation and depreciation. In 2021, the exchange rate ranged from approximately €0.000718 to €0.000755 per KRW, indicating relative stability. (freecurrencyrates.com) However, in 2022, the Won experienced a gradual depreciation against the Euro, with the exchange rate declining from €0.000739 per KRW in September to €0.000714 per KRW by the end of the month. (freecurrencyrates.com)

These long-term trends suggest that while short-term fluctuations are common, the KRW/EUR exchange rate is influenced by a combination of domestic economic policies, global economic conditions, and geopolitical developments.

Implications for Stakeholders

Understanding the dynamics of the KRW/EUR exchange rate is essential for various stakeholders:

• Businesses: Companies engaged in import and export activities between South Korea and the Eurozone must monitor exchange rate trends to manage costs and pricing strategies effectively.

• Investors: Currency fluctuations can impact the returns on investments denominated in foreign currencies. Investors should consider exchange rate risks when making investment decisions involving KRW and EUR assets.

• Policymakers: Authorities need to assess the impact of exchange rate movements on the economy, particularly concerning inflation, trade competitiveness, and foreign investment.

Future Outlook

Predicting future movements of the KRW/EUR exchange rate requires careful consideration of multiple factors:

• Economic Recovery: The pace of economic recovery in both regions post-pandemic will influence currency valuations. Stronger recovery in the Eurozone compared to South Korea could lead to a stronger Euro relative to the Won.

• Monetary Policy Divergence: Differences in monetary policy approaches between the Bank of Korea and the ECB, especially regarding interest rate adjustments, will affect the exchange rate.

• Global Economic Conditions: External factors, such as changes in global trade patterns, commodity prices, and investor sentiment, will also play a role in determining the exchange rate trajectory.

In conclusion, the KRW/EUR exchange rate has exhibited notable fluctuations over the past few months, driven by a complex interplay of economic indicators, monetary policies, trade balances, and geopolitical events. Stakeholders should remain vigilant and consider these factors when making decisions related to trade, investment, and economic policy.