South Korea is a country with a rich and ancient historical heritage. In recent years, it has rapidly risen to prominence as one of the world’s major centers for information and technology. It is also becoming a popular tourist destination due to the surging worldwide influence of its popular culture.
From a turbulent series of events in the 20th century to a fast-developing economy and increasing influence on the world stage in the 21st, Korea’s official currency has undergone several transformations and developments.
This article provides a brief look into the past and traces the history of the South Korean won, exploring its evolution and the factors that have shaped it into the currency it is today.
A Quick Overview of The Won
In the late 19th century, the won was introduced as the official currency of the Korean Empire. During Japan’s colonial rule, it was replaced by their currency, the yen. After the division of the Korean Peninsula into North and South in the aftermath of World War II, the South Korean won was reintroduced as the official currency of South Korea in February 1962. During this time, the country underwent rapid industrialization and economic growth, and the won was subject to frequent devaluations to support exports.
In the late 1980s and early 1990s, South Korea experienced an economic crisis, and the won experienced severe depreciation. The government implemented economic reforms and stabilization measures, and the won slowly regained its value and is an official South Korean currency to this day.
Whether you want to buy Korean won, or are simply interested in learning more, you’ve come to the right place. Now that we covered the basics, let’s take a deeper look at the history of the Korean won.
Korean Empire and The First Won
Emperor Gojong of the Joseon dynasty established the Korean Empire as a monarchy in October 1897. The won was first introduced in 1902 as the official currency of the Korean Empire.
The Korean Empire won was initially based on the silver standard, and its value was set at 15 won to 1 Japanese Yen. However, due to the increasing cost of silver and Japan’s influence over the Korean monetary system, the currency was gradually devalued, leading to public discontent.
During the first decade of the 20th century, the Korean Empire Won was subject to frequent devaluations and large-scale counterfeiting. The growing economic crisis, combined with Japan’s increasing control over the Korean economy, led to the eventual collapse of the currency.
In 1910, Japan annexed the Korean Empire, and the Japanese yen replaced the Korean Empire won as the country’s official currency. Korea was under Japan’s colonial rule until 1945. The legacy of the Korean Empire won survived, nevertheless, as the won remains the official currency of South Korea to this day.
WWII and the Korean War
After the ending of World War II in 1945 and the division of Korea into two separate states, two different currencies under the name of won circulated in the South and the North. The second South Korean won initially had a fixed exchange rate to the U.S. dollar at a rate of 15 won to 1 dollar.
However, the second Korean won rapidly declined in value due to several factors, such as a trade imbalance, political unrest, and rife inflation. It was essentially worthless by the beginning of the 1950s. Most notably, the Korean War heavily devastated the country’s economy and the value of this currency.
Introduction of the Hwan
The South Korean hwan was the official currency of South Korea from 1953 to 1962. It was introduced following the end of the Korean War in 1953 as a way to stabilize the country’s economy and replace the old currency, which had become worthless due to inflation.
The hwan was initially pegged to the US dollar at a rate of 1 Hwan to 2.46 US dollars. However, due to inflation and a growing trade deficit, the hwan was subject to frequent devaluations, leading to a decline in value.
In the late 1950s and early 1960s, the South Korean government implemented a series of economic reforms and stabilization measures in an effort to strengthen the hwan. Despite these efforts, depreciation continued, and in 1962, Hwan was replaced by the South Korean won as the country’s official currency.
South Korean hwan is a symbol of the country’s post-war economic difficulties and the challenges the Korean Republic faced in the early years of its development.
Return of the Won
The won was restored as South Korea’s official currency on June 10, 1962, at a rate of 1 won to 10 hwans. On March 22, 1975, the last hwan coins were taken out of circulation, making won the only legal form of money. When the won was restored in 1962, its exchange rate was established at 125 Won to one US Dollar.
The Current Won and State of the Korean Economy
The Korean Republic won (KRW), or the South Korean Won, is the current official currency of South Korea. The Bank of Korea, which has its headquarters in Seoul, is responsible for issuing the currency.
Won bills come in values of 1,000, 5,000, 10,000, and 50,000, while coins come in values of 1, 10, 50, 100, and 500 won. The official symbol for the South Korean won is a capital “W” with two parallel lines crossing it (₩), and the code for this currency is KRW. As of February 2023, a US Dollar is worth 1.224,53 KRW.
South Korea had one of the fastest-growing economies in the world from the 1960s to the 1990s. It remains one of the fastest-growing developed countries in the 2020s, next to Hong Kong, Singapore, and Taiwan. This Asian country is one of the world’s largest producers of automobiles and electronic goods. It also has a powerful shipbuilding industry and is home to many large construction companies.
Despite the growing economy of South Korea, the KRW remains a relatively volatile currency due to the political tensions in the region and the general changes in the global economy.
In 2022, the South Korean won (KRW) experienced considerable pressure on the world’s foreign exchange markets, losing about 10% of its value against the dollar since the beginning of January.
However, even though the won had one of the poorest performances of any currency in the first three quarters of 2022, it recovered from a 13-year low by the end of the year to have Asia’s best fourth-quarter currency performance.
We can attribute these abrupt swings to various factors, including the South Korean economy’s close ties to China and the impact of U.S. Federal Reserve rate increases. While these developments suggest that the won will continue to advance in 2023, they also highlight the risks associated with trading the won in the future.
Historical Figures on Won Banknotes
The current banknotes feature historical figures from the early Yi dynasty on the back of the bill. The 1,000-won bill features the writer Yi Hwang, writer YiI is on the 5,000-won note, while the 10,000-won bill features King Sejong.
The most recent addition is the writer Shin Saimsand on the 50,000-won bill, the only woman ever to be featured on any South Korean banknote.
The Standing Legacy of South Korean Won
Despite several changes, reforms, and turbulent events of the 20th century, the currency has remained the backbone of the South Korean economy. The government’s policies helped maintain economic growth and increase the standard of living for South Koreans despite the somewhat volatile nature of the Korean won.
Watch this space for updates in the Facts category on Running Wolf’s Rant.
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