The Korean won continues to struggle with sharp devaluation against the dollar as the country is pressured by rising tensions in local politics and the reshaped global trade environment.

On Friday, the won's value against the greenback touched 1,486.7 won during intraday trading. It was the first time the won-dollar exchange rate had hit the 1,480 won bar in nearly 16 years since reaching 1,488.5 won on March 16, 2009, amid the global financial crisis.

The won later gained strength but continued to hover around the 1,470 won range in after-hours trading, eventually wrapping up at 1,470.5 won.

The dollar-won exchange rate, which started trading in the early 1,300 won range this year, spiked to over 1,440 won following President Yoon Suk Yeol’s short-lived imposition of martial law earlier this month.

Amid strengthened projections that the US Federal Reserve may cut back on rate reductions following December’s Federal Open Market Committee meeting, and prolonged uncertainty in local politics with the impeachment of acting President Han Duck-soo, the won has inched up to the 1,480 won range.

Despite financial authorities' multiple pledges to intervene to control the market in the case of extreme volatility, the words have not been enough to tame unease in the market.

The weakening of the Korean won puts pressure on import prices, including energy. For Korea, a country heavily dependent on energy imports, this leads to higher prices of all goods. Higher prices lead to reduced domestic consumption, weighing the economy down.

Under such circumstances, consumer price growth, which in the past three months has stabilized at the 1 percent range, could spike -- putting pressure on the Bank of Korea to cut its policy rate, which currently stands at 3 percent. While the central bank projected consumer prices to rise by 2 percent next year, the strong dollar could agitate the growth.

If the BOK cuts the policy rate to boost the sluggish economy, investment sentiment for won-denominated assets would plunge, considering the rate gap with the US Federal Reserve, fanning the exodus of foreign capital here.

For instance, following the won’s depreciation Friday, the Kospi plunged below 2,400 as foreign investors dumped 172.5 billion won ($117.1 million) on the market.

The won's depreciation also places pressure on local lenders, weighing on the level of their risk-weighted assets. The BOK explained that the current level of won devaluation should not concern banks, however, as they maintain sufficient foreign reserves.

Though the weakening of the local currency has been considered a boost for export-focused companies, as the profit in won increases when the dollar gains, this formula may be a tale of the past, experts explained.

“Nowadays, more Korean companies roll out products in multiple currencies other than the US dollar with the diversification of sales outlets, and more operate production plants out of Korea,” Cho Sang-hyun, director of the International Trade and Economic Research Institute at the Korea International Trade Association, said.

For tech giants such as Samsung Electronics, SK hynix, LG Energy Solution and Samsung SDI, the strong dollar and weak won place a burden on their US investments, as they build plants and purchase equipment on US soil.

Many Korean companies also rely on the import of intermediate goods for production, Cho pointed out.

"For sectors such as shipbuilding that have localized a large part of their production, the weak won will not be a challenge. But for other sectors that are reliant on the import of intermediate goods, such as energy or F&B, the weak won strains their profitability."

Global investment banks projected that the won's depreciation is likely to continue into next year. Nomura Bank suggested that the currency may continue to lose value amid the Fed's signaling of a slow in rate cuts, and lingering worries over the industrial impact of Donald Trump's tariff threats linger.

The won-dollar exchange rate last surpassed 1,500 won on March 10, 2009, when trading closed at 1,511.5 won.

“With rising concerns that the political uncertainty could persist, the possibility of won depreciation further grows,” analyst Jeon Kyoo-won from Hana Securities said.

“The dollar-won exchange rate is likely to escalate further considering the American exceptionalism, and heightened trade conflicts under the Trump administration,” Jeon said, highlighting that the currency exchange rate could move past the 1,500 won mark next year.