S.Korean won slides to over 16-year low on Trump tariffs, bond index delay

By Jihoon Lee and Yena Park

SEOUL, April 9 (Reuters) - The South Korean won tumbled to a more than 16-year low on Wednesday, as U.S. President Donald Trump hit the country's biggest trading partner China with a whopping 104% tariff, raising risks of a sharp economic downturn at home and globally.

The won KRW=KFTC was quoted down 0.3% at 1,483.4 per dollar as of 0630 GMT, after falling as much as 0.6% to 1,487.6, with pressure also coming from an unexpected delay in the local bond market's inclusion in a global index.

The selloff extended the currency's losses for a fourth straight session to touch its weakest level since March 16, 2009, dragged down by the yuan's fall amid the escalating Sino-U.S. trade war.

It surpassed the 1,486.7 level touched in December 2024 when investor confidence was severely hit by then President Yoon Suk Yeol's brief imposition of martial law. The benchmark KOSPI stock index .KS11 slipped to 15-month lows and bond futures also weakened.

The won has weakened 0.8% against the dollar this year, after falling more than 12% last year, which was the biggest drop among emerging Asian currencies.

"The won will weaken past the 1,500 figure if it tracks the clear signal of the yuan's weakness," said a local currency trader.

Earlier in the day, the Chinese yuan CNH= fell to a record low, after the White House said on Tuesday afternoon 104% tariffs on imports from China, South Korea's biggest trading partner, would go into effect from Wednesday.

U.S. tariffs on China are expected to hit South Korea as well, as most of its exports to China are intermediate goods needed for assembly of final products, though some sectors might benefit from a comparative advantage.

The latest China-tariffs news overshadowed what Trump called a "great call" between him and South Korea's acting President Han Duck-soo on Tuesday, in which the two leaders discussed tariffs, shipbuilding and potential energy deals, a day before 25% levies on the Asian ally kicked in.

Also weighing on the won, FTSE Russell, a global index provider, said the inclusion of South Korean treasury bonds in its World Government Bond Index, which had raised hopes for billions of dollars of foreign capital inflows, would now take effect from April 2026, rather than from November 2025.

In the bond market, futures on three-year treasury bonds KTBc1 and 10-year bonds 10TBc1 weakened. The benchmark 10-year yield KR10YT=RR rose by 3.4 basis points to 2.737%.

The KOSPI closed down 1.7% at 2,293.70, its lowest since October 31, 2023. Foreigners sold local shares for a ninth straight session, despite government measures to mitigate the impact of U.S. tariffs.