When the Won Meets the Rand: A Tale of Two Troubles in 2025

September 2025: The Korean won and South African rand face off in a market drama that few anticipated, but the 7.7% drop in the KRWZAR pair over the last three months is no accident. This is not a story of two currencies drifting on the tide—it’s a collision of monetary policy, political gambits, and raw materials, where every percentage point has a backstory.

South Africa: The Rand’s Unsteady Balancing Act

South Africa’s economic tightrope is fraying. In the second quarter of 2025, the current-account deficit widened to R82.8 billion—a leap from R47.8 billion in the previous quarter and the widest since late 2023. That’s 1.1% of GDP, more than doubling from Q1. Exports of precious metals and minerals, which form 60% of South African export value, slipped 5% year-on-year. Platinum prices fell 10%, coal dropped 5%. Meanwhile, the trade surplus fell by 16% as imports rose and export volumes softened. The rand responded in kind, slipping to R18.45 per US dollar.

Policy makers were not idle. The South African Reserve Bank cut rates twice in 2025, bringing the repo rate to 7.0%—but then paused, wary of further capital flight. Inflation sits at a mild 4.4%, but with GDP contracting –0.6% year-on-year in Q2, cracks are showing. Add a stubborn 33% unemployment rate, and the rand is left tiptoeing between stimulus and stability, with the specter of the US’s 30% tariffs on South African exports (since August) looming overhead. The result: a currency battered by both domestic frailty and global headwinds.

The Korean Won: Between Rate Cuts and the Razor’s Edge

Across the hemisphere, South Korea is performing its own high-wire act. The Bank of Korea’s fourth rate cut in six meetings has dropped the policy rate to 2.5%—its lowest since 2022—in an attempt to cushion a faltering economy. Export growth, once a Korean hallmark, slipped to a 14-month low, and GDP forecasts for 2025 have been slashed to 0.8%, with some analysts whispering figures as low as 0.5%.

Political intrigue hasn’t helped. The impeachment of President Yoon Suk-Yeol and a snap election have left investors jittery. Meanwhile, the US imposed a 15% tariff on Korean imports in July (down from a threatened 25%), sending shockwaves through export-driven sectors like semiconductors and shipbuilding. The won, once resilient, found itself weakening to ₩1,383.40 per dollar as the KOSPI rose 1.25%—a paradox of market optimism and currency fragility.

Trade Wars, Commodities, and the Currency Chessboard

This isn’t simply a South African or Korean story—it’s a global one. In 2025, the US dollar is trending weaker, but the forces at play in the KRWZAR pair are homegrown. South Africa’s reliance on commodity exports has left it exposed to falling global prices and China’s demand slowdown. Meanwhile, Korea is grappling with the ricochet effects of US tariffs and a nervous property market.

Geopolitics has sharpened the stakes. The Trump-Lee summit in August brought hope of tariff relief, but progress remains hostage to the next negotiation. For South Africa, AGOA renewal talks and a R1 trillion rail program dangle the promise of export recovery, but not soon enough to steady the rand. For Korea, further rate cuts may come, but at the risk of fueling capital outflows.

The Numbers Behind the Curtain

The result? Over the last three months, the KRWZAR cross has fallen 7.7%, a slide that mirrors not just monetary divergence but the market’s verdict on each country’s vulnerabilities. On one side: South Africa’s growing external deficit, commodity malaise, and tariff drag. On the other: Korea’s cautious easing, political drama, and an export engine sputtering under the weight of global realignment.

The market expects the pair to stabilize near 0.0131 for the rest of the year, but with both economies facing make-or-break policy moments ahead, complacency is the enemy. As the world’s supply chains and trade corridors keep shifting, the KRWZAR pair will remain a barometer not just of rates and reserves, but of how nations adapt—or stumble—in a world where no currency stands alone for long.