Why the Indian Rupee and Korean Won Are Crashing: 4 Factors Driving Asia's Currency Crisis

Factor 3: South Korea's Won Falls to 17-Year Lows

The won crossed 1,500 per USD in mid-May and stayed above that level for 14 consecutive trading days by June 5 — the longest such stretch since the 2009 global financial crisis . It later breached 1,560 per USD on June 6, its weakest level in 17 years . The Bank of Korea reported that the weekly average won-dollar closing price in June exceeded 1,520, the highest since the 1997–98 Asian financial crisis . Deputy Prime Minister and Finance Minister Koo Yun-cheol stated on June 7 that "excessive expansion of exchange-rate volatility is not desirable for the Korean economy" and warned authorities "will not tolerate excessive volatility and one-way herd behavior" . The won's slide was directly attributed to sustained foreign selling in Korean stock and bond markets .

Factor 4: Oil Dependence and Trade Deficits Widen the Damage

India imports roughly 85% of its crude oil . When oil spiked above $110 per barrel earlier in 2026 amid the Iran conflict, it sharply increased dollar demand and worsened the current account deficit . The Economic Survey highlighted the deficit in goods trade and dependence on foreign portfolio investors as structural factors making the rupee susceptible to external shocks .

RBI and Korean Authorities Step In

The Reserve Bank of India announced measures on June 5 — including subsidized FX hedging for FCNR(B) deposits and concessional swap facilities for state-owned enterprises — to stem the rupee's decline . The Indian government also removed taxes on capital gains and interest on government securities for foreign investors . South Korean authorities convened joint inspection meetings and warned against excessive volatility .

The Big Picture: A Synchronous EM Asia Exodus

The simultaneous weakening of the rupee and won — along with pressure on other Asian currencies — reflects a synchronous capital exodus from EM Asia as global risk appetite deteriorates and the dollar strengthens . The combination of a hawkish Fed, geopolitical shock from the Iran conflict, and structural vulnerabilities in oil-importing economies has created a perfect storm for Asia's emerging-market currencies. As one analyst put it, the rupee's record low has been "primarily driven by external factors, not domestic economic weakness" .