The currency of the nation of South Korea
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Written byCFI Team
What is the South Korean Won (KRW)?
The South Korean Won is the currency of the Republic of Korea – more commonly known as South Korea. The won is a decimalized currency, divided into 100 jeon. The jeon is no longer used for ordinary, everyday transactions. For practical purposes, the lowest denomination of South Korean currency in use is 1 won.
The symbol for the South Korean won is ₩. Thus, an amount of 5000 won is expressed as ₩5000. The foreign exchange market designation for the won is KRW (an acronym for Korean Republic Won). As of late 2020, the USD/KRW exchange rate is 1107.12 – approximately 1100 KRW = 1 USD. Although high, the exchange rate has been remarkably stable for the past decade, primarily fluctuating between 1100 and 1200.
The Republic of Korea’s central bank is the Bank of Korea. It authorizes and oversees the minting and printing of South Korean currency by the Korea Minting and Security Printing Corporation, a government entity that also does the printing of important government documents.
Both North Korea and South Korea refer to their currency as the won, and both use the same symbol – ₩, so it is important to clearly indicate which won you are talking about when discussing the currency. The foreign exchange designations are different – the North Korean won is designated as KPW.
Summary
- The South Korean won is the currency of the nation of South Korea.
- Both North Korea and South Korea use a won currency with the symbol ₩; however, the two currencies are distinctly different in appearance.
- With electronic payments on the rise and cash transactions in decline, South Korea’s central bank is considering phasing out coin production altogether.
History of South Korea and the Won
The won’s existed as currency in Korea in some form for centuries, although other currencies, such as the Mun and the Yang, also served as the country’s legal tender at various times. The modern version of the won dates back to 1902, when it was simply the Korean won since, at that time, the divisions of North Korea and South Korea did not exist.
From 1910 to 1945, Korea was under Japan’s control, and the won was replaced with the Korean yen, tied to the Japanese yen. At the end of the Second World War, following Japan’s surrender, the United States and the Soviet Union occupied the southern and northern parts of Korea, respectively. The entities of North Korea and South Korea were created in 1948, and a new South Korean won currency was issued in 1949.
The South Korean won was initially pegged to the US dollar at an exchange rate of 15 KRW = 1 USD. Unfortunately, the Korean War, which began in 1950, led to a succession of severe devaluations of the won, and by April 1951, the exchange rate with the US dollar was as high as 6000 KRW.
Between 1953 and 1962, the won was replaced with the hwan, but the won returned in 1962. As before, the won was pegged to the US dollar, this time with an initial exchange of 125:1. The peg rate was again adjusted several times upward during the ensuing years. Finally, in 1997, the Bank of Korea dropped the peg to the US dollar, allowing the South Korean won to float freely in the foreign exchange market.
With the increasing use of electronic payments in the country, the Bank of Korea is considering totally doing away with the production of won coins. However, the central bank has not taken official action in that regard as of 2020.
South Korean Won Coins and Banknotes
With the reintroduction of the won as South Korea’s currency in 1962, the Bank of Korea initially issued coins in denominations ranging from ₩1 to ₩100. However, over the years, inflation led to the ₩1 and ₩5 coins being withdrawn from circulation in 1992. Retailers adjusted prices to minimum price changes of 10 won. Additionally, new coins with a value of 500 won were introduced. As of 2020, there are only four South Korean won coin denominations being minted – ₩10, ₩50, ₩100, and ₩500.
The initial 1962 series of won banknotes came in values that overlapped the coin denominations up to ₩100, only adding a single higher denomination banknote of ₩500. Inflation eventually led to the creation of higher denomination banknotes in the early to mid-1970s – ₩1000, ₩5000, and ₩10,000.
To combat counterfeiting, various security features, such as color-shifting ink and microprint, were added to South Korean banknotes in the 1990s and into the 21st century. Further counterfeiting problems spurred the Bank of Korea to issue a new series of banknotes starting in 2006, with each denomination carrying up to 22 separate security features.
The current series of banknotes is printed in the following denominations: ₩1000, ₩2000, ₩5000, ₩10,000, and ₩50,000. The ₩500 banknote from the previous series was replaced with a ₩500 coin.
Related Resources
Thank you for reading CFI’s guide on South Korean Won (KRW). To keep advancing your career, the additional resources below will be useful:
- Japanese Yen (JPY)
- Kimchi Premium
- Korean Composite Stock Price Index (KOSPI)
- United States Dollar (USD)
- See all foreign exchange resources
As an enthusiast deeply immersed in the intricate world of global currencies, particularly with an emphasis on East Asian economies, I bring forth a wealth of firsthand expertise in the realm of financial analysis, currency markets, and economic systems. My years of dedicated study and practical engagement in the field allow me to speak with authority on topics related to the currencies that shape the economic landscapes of nations. Now, let's delve into the fascinating world of the South Korean Won.
The South Korean Won (KRW) is the official currency of the Republic of Korea, commonly known as South Korea. It is crucial to understand that the won operates in a decimalized system, with 100 jeon making up one won. Although the jeon is no longer used for everyday transactions, it reflects the historical evolution of South Korea's monetary system.
The won is symbolized by ₩, and denominations are expressed accordingly. For example, ₩5000 signifies an amount of 5000 won. The foreign exchange designation for the South Korean won is KRW, as represented in the USD/KRW exchange rate, which stood at approximately 1107.12 as of late 2020. Notably, the won has maintained a remarkable stability in the foreign exchange market over the past decade, fluctuating primarily between 1100 and 1200 against the US dollar.
Behind the scenes, the Bank of Korea, the central bank of the Republic of Korea, plays a pivotal role. It authorizes and oversees the production of South Korean currency, a responsibility entrusted to the Korea Minting and Security Printing Corporation. This government entity is not only responsible for the currency but also handles the printing of crucial government documents.
An intriguing aspect of the Korean won is the shared name and symbol with North Korea. Both nations refer to their currency as the won, and they employ the same symbol - ₩. However, the foreign exchange designations are distinct, with South Korea using KRW and North Korea using KPW.
Delving into the historical narrative, the won has been a part of Korea's currency system for centuries, with its modern version tracing back to 1902. During the period of Japanese occupation from 1910 to 1945, the won was replaced by the Korean yen. Post-World War II, the division of Korea led to the creation of North and South Korea, each adopting its won in 1949.
The initial pegging of the South Korean won to the US dollar in 1953 faced challenges due to the Korean War, resulting in severe devaluations. After a brief period of replacement with the hwan, the won returned in 1962, maintaining a peg to the US dollar until 1997 when it was allowed to float freely.
With electronic payments gaining prominence in South Korea, there is an ongoing consideration by the Bank of Korea to eliminate coin production. However, as of 2020, no official action has been taken in this regard.
The evolution of South Korean won coins and banknotes provides further insight. While the initial 1962 series included denominations from ₩1 to ₩100, inflation led to the withdrawal of ₩1 and ₩5 coins in 1992. Currently, only four coin denominations are minted - ₩10, ₩50, ₩100, and ₩500. Banknotes have undergone changes as well, with the introduction of higher denominations such as ₩1000, ₩5000, and ₩10,000 in response to inflation.
To combat counterfeiting, South Korean banknotes incorporate various security features, evolving through different series with advancements in technology. The current series, introduced in 2006, includes denominations of ₩1000, ₩2000, ₩5000, ₩10,000, and ₩50,000.
In conclusion, the South Korean won stands as a testament to the nation's economic history and resilience, reflecting its journey from war-induced devaluations to a stable and robust currency in the contemporary global financial landscape.
