Congress Checks Trump as Korean Won Gains Ground

Democrats’ sweep of both chambers of Congress is expected to complicate President Donald Trump’s economic agenda and strengthen the Korean won against the U.S. dollar, experts said Wednesday. The election shifted leverage in Washington. Lawmakers are expected to gain more power to scrutinize the administration’s policies, while Trump’s plans for tax cuts and expanded government spending face new constraints.

The Washington power struggle

“A fierce confrontation between Congress and the Trump administration will be inevitable,” said Shin Se-don, an economics professor at Sookmyung Women's University. Shin said Democratic opposition could set back Trump’s economic initiatives and slow growth across the U.S. economy. The immediate contest is over who controls policy and spending, and investors are watching what follows.

Shin said a prolonged standoff between the White House and Congress could unsettle investors and undermine confidence in U.S. financial markets. If markets correct, he said, U.S. financial assets could become less attractive and the dollar could weaken, giving the won room to appreciate further.

The won-dollar exchange rate has already fallen from the 1,500 won range in June to the 1,300 won range in October. Bank of Korea monthly averages were 1,527.95 won per dollar in June, 1,488.92 in July, 1,404.35 in August, 1,358.75 in September and 1,335.70 in October.

Shin also said Korea’s current account balance and exporters’ dollar sales could weigh more heavily on the exchange rate. Those flows matter alongside the Washington fight. U.S. political decisions can move the dollar, while trade and exporter activity in Korea shape the won’s position.

Who bears the currency swing

A stronger won could lower Korea’s import costs for crude oil and raw materials, said Kim Dae-jong, a professor of business administration at Sejong University. That could ease inflationary pressure on energy and food prices. For people facing those costs, the shift could bring some relief.

Korean exporters, however, could pay the other side of the exchange-rate move. A stronger won lowers the value of dollar-denominated earnings when companies convert them into won, Kim said. The same shift that helps cut import costs can squeeze exporters’ returns.

Kim expects the won to strengthen in the near term because Democratic control of Congress could constrain the Trump administration’s economic policies. “With Democrats controlling Congress, it will be harder for the Trump administration to borrow heavily to finance government spending or push through further tax cuts,” he said. That could ease pressure on U.S. Treasury yields and the won-dollar exchange rate.

The longer-term risk

Kim warned that the won could weaken over the longer term if the semiconductor export boom loses momentum. Strong chip exports in recent months, particularly memory semiconductors used in AI infrastructure, have brought in dollars and supported the won.

He said a possible loss of momentum in Trump’s AI support policies under a Democratic-controlled Congress could dampen global investment sentiment toward AI and semiconductor markets. That, in turn, could weigh on Korea’s chip exports, curb export growth and reduce dollar inflows. “A slowdown in the semiconductor boom could curb Korea’s export growth and reduce dollar inflows, potentially reversing the won’s recent appreciation trend,” Kim said. Washington’s policy fight may unsettle markets first. Korea’s exposure runs through imports, exporters and chip sales.