Korean Won (KRW) Definition and Currency History

Korean Won (KRW) Definition and Currency History

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Updated February 16, 2024
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What Is the Korean Won (KRW)?

The Korean won (KRW) is the national currency of South Korea. Its users denote the won by using the symbol "₩," as in "₩1,000."

It has been administered by the nation's central bank, the Bank of Korea, since 1950. The won is fully convertible and is routinely traded against other global currencies, such as the U.S. dollar (USD), the Japanese yen (JPY), and the euro (EUR). One won is divided into 100 subunits, called "jeon."

One U.S. dollar was equal to approximately 1,325 KRW as of January 2024.

Key Takeaways

  • The Korean won (KRW) is the national currency of the Republic of South Korea.
  • The won has been replaced and modified at several points over the past century to cope with devaluations and the effects of war.
  • The won has been used in some form for thousands of years.
  • It's a stable and widely traded currency, supported by a large and very advanced South Korean economy.

Understanding the Korean Won

The Korean won has been used in some form for thousands of years. It was briefly replaced with a Japanese colonial currency called the Korean yen during the occupation of Korea by Japan from 1910 to 1945.

The division of North Korea and South Korea resulted in two separate currencies after World War II. They were both called the Korean won. They were initially pegged to the USD at a rate of 15 won to one dollar but several devaluations occurred thereafter due largely to the effects of the Korean War on the nation's economy.

The Bank of Korea began operations as South Korea's central bank in 1950. It assumed the duties of the previous monetary authority, the Bank of Joseon, with exclusive authority to issue banknotes and coins for the country.

The Bank of Korea issues banknotes in denominations ranging from 1,000 to 50,000 won. The notes feature early Yi or Chosŏn dynasty figures, including writer Yi Hwang, featured on the 1,000-won note. Yi I is featured on the 5,000-won note and King Sejong appears on the 10,000-won note.

South Korea sought to expand the relevance of its currency to international trade by replacing its dollar peg with a basket of currencies in the 1980s. Further changes were made in the late 1990s when the government responded to the Asian Financial Crisis by allowing the won to float freely on foreign exchange markets.

The Won and Korea's Economy

South Korea's economy is one of the largest in Asia and it's a major force in international commerce. Like many advanced economies, it has a large service sector that makes up about 56% of the annual gross domestic product (GDP).

South Korea is also known for its advanced manufacturing sector which produces high-value products like semiconductors and automobiles.

Industry is a significant component of South Korean GDP, contributing about 32% of the total in 2022, the last year for which comprehensive figures are available.

The value of the won has been quite stable in the millennium. One USD was equal to 1,117 won in February 2011. The equivalent figure was marginally greater as of December 2023: 1,304 won per USD.

Inflation in South Korea declined from 4.67% in 2008 down to .54% in 2020, but it then climbed back up to 3.42% in 2023. The country's economy has grown at a compound annual growth rate (CAGR) of about 2.8% per year. Per-capita GDP measured based on purchasing power parity (PPP) grew from $29,644 in 2009 to $50,330 in 2022 in constant international $.

What Is a Central Bank?

A central bank manages and controls interest rates and the amount of money in an economy for a single country or a group of countries. It's not a commercial bank but rather an institution.

How Is Inflation Measured?

Inflation is measured using a basket of products and services, not just one product or service. A government agency monitors these prices over time to determine whether they're increasing, decreasing, or remaining steady. The Federal Reserve monitors these price indexes in the U.S.

What Does It Mean When a Currency Is Convertible?

A currency is convertible if it can be exchanged into another country's currency without undue difficulty or barriers. Some nations take steps to limit the convertibility of their currencies.

The Bottom Line

The Korean won is the national currency of the Republic of South Korea, a country that boasts an extensive and advanced economy. The won existed in some form for literally thousands of years. A U.S. dollar was worth about 1,325 Korean won as of January 2024, but this is a fluctuating number that can react to numerous factors.

Article Sources
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  1. Bank of Korea. "Currency: 1950 - 1953."

  2. Federal Reserve Bank of St. Louis. "South Korea/U.S. Foreign Exchange Rages."

  3. Statista. "South Korea: Distribution of Gross Domestic Product (GDP) Across Economic Sectors from 2009 to 2019."

  4. Statista. "South Korea: Inflation Rate from 1984 to 2021."

  5. World Bank. "GDP Growth (Annual %) -Korea, Rep."

  6. World Bank. "GDP per Capita, PPP (Current International $ - Korea, Rep."

  7. European Central Bank. "What Is a Central Bank?"

  8. Board of Governors of the Federal Reserve System. "What Is Inflation and How Does the Federal Reserve Evaluate Changes in the Rate of Inflation?"

  9. Economicshelp.org. "Currency Convertibility."

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