Why do hwan

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Last updated: April 8, 2026

Quick Answer: The term 'hwan' refers to the currency of South Korea from 1953 to 1962, introduced after the Korean War to replace the won. The hwan was initially pegged at 100 hwan to 1 US dollar in 1953, but experienced significant devaluation, reaching 1,300 hwan per dollar by 1961 due to inflation. It was replaced by the new won in 1962 at a rate of 10 hwan to 1 won, as part of economic reforms under President Park Chung-hee to stabilize the economy.

Key Facts

The hwan was introduced on February 15, 1953, replacing the won at a rate of 100 hwan to 1 won.
It was initially pegged at 100 hwan to 1 US dollar in 1953, but devalued to 1,300 hwan per dollar by 1961.
The hwan was replaced by the new won on June 9, 1962, at a conversion rate of 10 hwan to 1 won.
Inflation during the hwan era averaged over 30% annually in the late 1950s, peaking at 50% in 1960.
The hwan was issued in denominations including 10, 50, 100, 500, and 1,000 hwan notes, with coins for smaller values.

Overview

The hwan was the official currency of South Korea from 1953 to 1962, introduced in the aftermath of the Korean War (1950-1953) to address economic instability and hyperinflation. It replaced the first South Korean won, which had been in use since 1945 after Korea's liberation from Japanese rule. The transition occurred on February 15, 1953, with an initial exchange rate of 100 hwan to 1 won, as the war had severely devalued the won, with inflation exceeding 100% annually by 1952. The Bank of Korea, established in 1950, issued the hwan to help stabilize the post-war economy, which was devastated by conflict, with GDP per capita falling to around $70 by 1953. The hwan era coincided with reconstruction efforts under President Syngman Rhee, but economic challenges persisted, including reliance on US aid, which accounted for over 10% of South Korea's budget in the mid-1950s.

How It Works

The hwan functioned as a fiat currency, with its value managed by the Bank of Korea through monetary policies aimed at controlling inflation and supporting economic growth. Initially, it was pegged to the US dollar at 100 hwan per dollar in 1953, but this peg was abandoned due to persistent trade deficits and inflationary pressures. The currency operated under a fixed exchange rate system until 1961, when it was devalued to 1,300 hwan per dollar to boost exports, as South Korea's trade balance showed a deficit of over $100 million annually in the late 1950s. The hwan was issued in banknotes and coins, with denominations including 10, 50, 100, 500, and 1,000 hwan notes, facilitating daily transactions in a cash-based economy. Its replacement in 1962 involved a currency reform that demonetized the hwan and introduced the new won, part of broader economic plans under President Park Chung-hee to industrialize and modernize South Korea.

Why It Matters

The hwan matters as a historical symbol of South Korea's economic struggles and recovery post-Korean War, highlighting the transition from a war-torn economy to rapid industrialization. Its devaluation and eventual replacement paved the way for the 'Miracle on the Han River,' with South Korea's GDP growing from $2.7 billion in 1962 to over $1.6 trillion by 2020. The lessons from the hwan era, such as the need for stable monetary policy, influenced later economic reforms, including the establishment of export-oriented industries that now account for over 50% of South Korea's GDP. Today, the won is a strong global currency, with the hwan serving as a reminder of the country's resilience and economic evolution.