Why the won-yen rate hit an 18-year low — chip dollars in Seoul, fiscal worries in Tokyo
The won-yen cross rate fell to about 840-847 won per 100 yen between October 6 and 8, 2026, the weakest yen against the won since January 2, 2008 (837.58 won) and more than 60 won below early-August levels above 900. The won strengthened as booming chip exports brought in dollars that exporters converted, pushing the won-dollar rate to about 1,338-1,343, roughly 14% below early July. The yen stayed weak at 158.21 per dollar on October 8 despite a Bank of Japan hike in September, weighed by Japan's fiscal worries, a wide US-Japan rate gap and an oil-driven trade deficit.
The three lines
- Level — 840s won per 100 yen, lowest since January 2008; down 60+ won in two months
- Won side — chip-export dollars; won-dollar about 14% below early July
- Yen side — BOJ hike failed to lift it; fiscal worries, rate gap and trade deficit keep it near 158 per dollar
Key questions
- Why is the won-yen exchange rate so low
- **The won got stronger and the yen got weaker at the same time.** | Side | Direction | Cause | |---|---|---| | Won | Stronger | Chip-export dollars, exporters selling dollars, SK hynix US ADR proceeds | | Yen | Weaker | Japan fiscal worries, wider US-Japan rate gap, oil-driven trade deficit | | Result | — | 840s per 100 yen, lowest since January 2008 |
- Won yen rate October 2026
- **842-847 won per 100 yen on October 6-8, depending on source and timing.** | Date | Won per 100 yen | Source | |---|---|---| | Oct. 6 | 846 (intraday) | Korea Economic Daily | | Oct. 7 | 842.19 | Jaekyung Ilbo | | Oct. 8 | 846-847 | Kyunghyang / Korea Economic Daily (Woori Bank, intraday) | | Jan. 2, 2008 | 837.58 | — | | Early August | 900+ | — |
- Why is the yen weak despite BOJ rate hike
- **The US-Japan rate gap is still wide and fiscal risk weighed more.** | Factor | Detail | |---|---| | Rate gap | US 20-year yield 5.250% (Sept. 4) → 5.712% (Oct. 5) | | Fiscal | Japan government debt burden, political uncertainty | | Trade | Oil import dependence; August trade deficit ¥687.7 billion | | Yen-dollar | Near 164 in late July → 156 after joint intervention → 158.21 on Oct. 8 |
A trip to Japan is the cheapest it has been for Koreans in 18 years. The won-yen cross rate fell into the 840s per 100 yen in the first week of October 2026 — the weakest yen against the won since January 2, 2008, when it was 837.58. In early August it was above 900, so it fell more than 60 won in two months. One hundred thousand won now buys about ¥11,800, roughly 18% more than at 1,000 won per 100 yen. The move is not one-sided: the won is strengthening and the yen is weakening at the same time.
1. How far it has fallen
| Date | Won per 100 yen | Won per dollar | Yen per dollar |
|---|---|---|---|
| Jan. 2, 2008 | 837.58 | — | — |
| Early July | — | 1,555.8 (week of July 2 close) | — |
| Late July | — | — | Near 164 |
| Early August | 900+ | — | — |
| Oct. 6-8 | 842-847 | 1,338.5 (Oct. 8, intraday) | 158.21 (Oct. 8) |
| Oct. 9 | — | 1,342.8 | — |
Korea has no direct won-yen market, so the rate is a "cross rate" derived from won-dollar and yen-dollar. When the won gains on the dollar and the yen loses to it, the effects compound — which is what happened.
2. Why the won is strong and the yen is weak
| Won strength | Yen weakness | |
|---|---|---|
| Trade | Chip export boom brings in dollars | Oil import dependence; August trade deficit ¥687.7 billion |
| Companies | Samsung, SK hynix and other exporters convert dollars to won, net dollar sellers since July | — |
| Capital | SK hynix US ADR proceeds; foreign selling of Korean stocks eased | Negative real rates push Japanese money abroad |
| Rates | — | Surging US long-term yields widen the US-Japan gap |
| Fiscal | Chip-driven tax windfall; projected debt-to-GDP 48.3% next year vs 51.6% in this year's budget | Government debt and political uncertainty |
The Bank of Japan raised rates in September, yet the yen did not recover: US yields rose faster. The US 20-year Treasury yield climbed from 5.250% on September 4 to 5.712% on October 5. When yen-dollar neared 164 in late July, US and Japanese authorities intervened together and briefly pushed it to 156, but fiscal worries pulled it back to 158.
3. Who gains and who pays
| Who | Effect |
|---|---|
| Korean travelers to Japan | About 18% more yen per won; Kyunghyang estimates the gain roughly covers an airfare |
| Shoppers | A bag priced at 2.7 million won in Korea and ¥270,000 in Japan costs about 2.28 million won at today's rate |
| Investors | Buying yen to purchase a yen-hedged long-term US Treasury ETF, betting on falling US yields and a yen rebound; about $4 million net bought in a month |
| Exporters competing with Japan | Cars, machinery and steel lose relative price competitiveness abroad |
| Oil importers | A lower won-dollar rate eases the cost of dollar-priced crude somewhat |
The yen-Treasury trade cuts both ways: if the yen weakens further or US yields keep rising, investors lose on both legs.
4. What remains unclear
- Direction: markets don't expect a sharp reversal; the chip boom is projected to run into next year, sustaining dollar inflows.
- Reversal risks: a chip downturn, heavy foreign selling of Korean stocks or surging Korean outbound investment could weaken the won again. KB Kookmin Bank economist Lee Min-hyeok cites low birth rates, aging and slowing productivity as "structural upward pressure on the exchange rate."
- US data: US September CPI on October 14 could revive Fed hike expectations and lift the dollar (see "US September CPI forecast").
- Data gaps: outlets report won-yen between 842 and 848 depending on timing. Korea's FX market reopens October 12 after the Hangul Day holiday.
Sources
- Korea Economic Daily — Won-yen rate at 18-year low as investors eye yen-hedged US Treasuries
- The Kyunghyang Shinmun — Won-yen exchange rate at an 18-year low, why is the won strong?
- Jaekyung Ilbo — Yen falls to 842 won, lowest in 18 years
- Newspim — Yen at record-low 848 won
- The Public — Chip export boom lifts won; yen weak despite rate hike