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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, November 11, 2025 — The Korean won fell to the ₩1,460 level per U.S. dollar, heightening concerns over the capital soundness of domestic financial institutions. A continued depreciation could erode Common Equity Tier 1 (CET1) ratios, a key measure of banks’ financial stability, as the valuation of foreign-currency assets rises.
According to the Seoul Foreign Exchange Brokerage, the won closed at ₩1,463.3 per dollar on Monday, marking its weakest level in seven months. The local currency has dropped steadily since the end of June, when it stood at ₩1,356.4. Some analysts warn that the won could soon breach the ₩1,500 threshold.
As the won weakens, the value of banks’ foreign-denominated risk-weighted assets (RWA) increases, pushing up the denominator in the CET1 ratio and thereby lowering the capital adequacy figure.
The combined RWA of Korea’s four major banks reached ₩860 trillion in the third quarter, up 20% from 2021 (₩716 trillion). Industry data show that for every ₩10 decline in the won’s value against the dollar, RWA rises by roughly ₩5 trillion, reducing CET1 ratios by 2–3 basis points.
Financial experts warn that sustained currency weakness could hinder the government’s plan to promote “productive finance”, as lenders may turn more conservative to preserve capital buffers.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
