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.
- 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.
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