A major development in South Korean financial diplomacy unfolded on January 15, 2026, as the nation secured an unprecedented level of support from the United States Treasury to address the won’s persistent decline, Korea Times reports. Following high-level discussions in Washington between Minister of Economy and Finance Koo Yun-cheol and American Treasury Secretary Scott Bessent, both governments formalised a rare joint recognition of the need to curb the currency’s rapid depreciation. This collaborative stance marks a significant shift, as Washington traditionally avoids direct commentary on the exchange rates of its trading partners.

For South Korea, this coordinated intervention is a critical defensive measure aimed at protecting the domestic economy from the inflationary shocks of a weak won while ensuring that its massive long-term investment commitments to the US remain financially viable.

The urgency of the situation was underscored on January 15, 2026, when the Bank of Korea (BOK) unanimously voted to maintain its benchmark interest rate at 2.5%. This was the fifth consecutive meeting where rates remained unchanged, reflecting a cautious balancing act by Governor Rhee Chang-yong. While the domestic economy requires support, the central bank is effectively constrained by the won’s longest losing streak since the global financial crisis.

A further drop in the currency would drive up import costs and reignite inflation, yet raising rates to defend the won could stifle fragile domestic demand. In a notable shift, the BOK removed references to potential near-term rate cuts from its policy statement, signalling that currency volatility and lingering inflation risks have forced a more prolonged pause in monetary easing than previously anticipated.

According to Choi Ji-young, Deputy Minister for International Economic Affairs, the rare verbal support from Secretary Bessent is a byproduct of the strategic trade agreement reached last year, Korea Times reports. Under this deal, Seoul committed to an annual investment of $20bn in the US to bolster American industrial sectors. Choi noted that the size and timing of these capital outflows are sensitive to market stability; a won that is too weak increases the cost of these investments for Korean firms, potentially necessitating a recalibration of the agreed schedule.

Korea Times also reports that secretary Bessent’s rare intervention—noting that the won’s decline did not reflect Korea’s strong economic fundamentals—provided immediate, if brief, relief. Following his remarks, the won initially strengthened to KRW1465 per dollar before closing the day at KRW1469.7 per dollar. This slight recovery follows a volatile period where the currency struggled despite aggressive local intervention on December 24, 2025. Market analysts suggest that while Seoul has leading responsibility for its monetary path, the current global environment requires the US to act as a partner in maintaining a stable exchange rate to prevent trade imbalances and ensure the smooth flow of strategic investments.

South Korea is navigating a narrow corridor where domestic monetary policy is increasingly tied to international diplomatic coordination. By aligning with the US Treasury, Seoul aims to stabilise the won not just for immediate trade benefits, but to protect the integrity of its $20bn annual investment pipeline. As long as external pressures like dollar strength and regional volatility persist, this unified front between the Bank of Korea and the US Treasury will remain the primary bulwark against further economic instability.