South Korean Won: Foreign inflows and exporters support KRW – Commerzbank
Commerzbank notes that the Kospi has rebounded 29.5% from its 30 July low, supported by strong tech earnings and improved sentiment toward semiconductor and memory chipmakers.
Commerzbank reports that the South Korean Won (KRW) has strengthened due to foreign inflows and increased exports. The Kospi index has rebounded 29.5% from its low on July 30, supported by robust tech earnings and a positive outlook for semiconductor and memory chip manufacturers. The US Dollar (USD) against the KRW has declined nearly 8.9% from its July peak, as Korean exporters repatriate funds and foreign portfolio investors increase their holdings in South Korean equities.
Despite a modest 0.3% increase to 1,421 following a stronger USD, the KRW remains the second-strongest Asian currency this year, up 1.5% against the USD and outperforming the regional average of -2.1%. Continued equity market stability could further bolster the KRW in the near term. The Kospi index rose 3.6% yesterday, following a 3.7% rally on Wednesday, marking a 29.5% recovery from its July 30 low.
Strong tech earnings have bolstered market sentiment towards semiconductor names, lifting South Korean chipmakers. This positive combination of enhanced semiconductor sentiment and easing Kospi volatility has attracted foreign investors, resulting in net purchases of USD1.9 billion worth of South Korean equities since July 30. A further decline in volatility might facilitate additional portfolio inflows and provide support for the KRW in the short term.
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