The dollar-won exchange rate rose to 1,362.6 on Thursday as Seoul and Washington unveiled energy projects under their strategic investment framework.
The commitments fall under Korea’s $200 billion investment pledge outside shipbuilding, with annual payments capped at $20 billion. The Bank of Korea says the funding can be managed without impairing foreign reserves or its capacity to stabilize the currency market. Some economists question whether that assurance fully accounts for the longer-term strain.
The package includes Project Star, a $22.3 billion gas-fired power project in Encinal, Texas, designed to supply artificial intelligence data centers, alongside a framework for eight nuclear reactors and a conditional review of Alaska LNG.
The proposed advance payment for nuclear equipment remains subject to commercial and domestic legal requirements. The government did not disclose Korea’s initial contribution to the Texas project or the timing of its first capital call.
“We do not expect the investment to reduce our capacity for market-stabilization measures,” the official said.
Asked whether redirecting that income could leave less room to replenish reserves after future dollar-selling intervention, the official acknowledged the concern but stressed that the annual limit was a ceiling, not a fixed payment schedule.
“It does not mean the full amount will be used at once, so it would be excessive to assume the impact would be transmitted directly,” the official said.
That assessment echoes BOK Gov. Shin Hyun-song’s view that foreign-asset income would provide the main funding source and that the annual commitments could be met without significantly disrupting the FX market.
Additional financing could be raised outside Seoul’s spot market through government-backed foreign-currency bonds issued by the Korea-U.S. Strategic Investment Corp. Policy lenders, including Korea Development Bank and the Export-Import Bank of Korea, can also support financing.
Korea’s substantial dollar earnings provide a cushion. Its current-account surplus reached $233.09 billion in the first seven months of this year, including $42.08 billion in July.
Those earnings, however, are not a pool of dollars automatically available to fund the U.S. projects. Korean residents are also accumulating overseas assets, so the surplus does not translate directly into dollar supply in Seoul’s currency market.
Foreign reserves stood at $442.28 billion at the end of August. Short-term external debt was equivalent to 46.5 percent of reserves at the end of the second quarter, a level the BOK considers manageable.
Recent intervention nevertheless illustrates how quickly demand for dollar liquidity can rise under stress. Authorities sold a net $22.47 billion in the fourth quarter of 2025 to stabilize the currency market, followed by another $23.24 billion in the first half of this year.
Lee Min-hyuk, an economist at KB Kookmin Bank, said diverting foreign-asset income to U.S. projects could weaken the authorities’ ability to replenish reserves even if it avoids an immediate surge in domestic dollar demand.
Investment income has helped offset reserve losses during previous bouts of heavy intervention, Lee said. With more of that recurring income committed elsewhere, reserves could fall faster the next time authorities need to defend against disorderly currency moves.
The question is therefore whether Korea will retain the same capacity to rebuild its buffer after market stress.
Choi Ji-wook, an economist at Korea Investment & Securities, estimated that adding the full annual ceiling to outbound investment would put 20 to 25 won of upward pressure on the equilibrium won-dollar exchange rate under a simplified scenario.
The actual effect would probably be smaller, he said, because the financing plan does not require the entire sum to be purchased in the domestic market. Other economic benefits of the broader bilateral agreement could also offset some pressure.
Much will depend on the size, timing and funding of actual capital calls. No decision has been made on whether payments will be concentrated in a few transactions or spread monthly or quarterly, the BOK official said.
The first disbursement will offer an early test of whether the financing arrangements can keep a large overseas investment commitment from unsettling the won.
AJP Takeaways
- The won weakened to 1,362.6 per dollar as Seoul outlined U.S. energy investments, including a possible nuclear-project payment of up to $10 billion this year.
- The BOK expects foreign-asset income and financing outside the domestic spot market to limit currency pressure. Economists question whether diverting that income could slow reserve replenishment after intervention.
- The eventual FX impact will depend on actual payments and how they are financed. One simplified estimate points to 20 to 25 won of upward pressure, with the likely effect smaller.
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