South Korean Won: Supportive fundamentals, slower gains – Commerzbank
Commerzbank’s FX analysts Charlie Lay and Moses Lim note that the Korean Won has rallied nearly 15% against the Dollar since late June, driven less by the current account surplus and more by structural shifts in flows.
Commerzbank's FX analysts Charlie Lay and Moses Lim report that the South Korean Won has risen nearly 15% against the US Dollar since late June. This surge is attributed to structural changes in flows, including increased NPS FX hedging, corporate ADR-related repatriation, and strong Bank of Korea-backed fundamentals. However, the analysts anticipate that USD/KRW will consolidate around 1,330-1,380 in the near term as authorities work to curb further appreciation.
The Bank of Korea forecasts a record current-account surplus of USD450bn in 2026, with a potential elevation to USD430bn in 2027, driven by the semiconductor export boom. Their hawkish stance and back-to-back rate hikes provide additional support for the KRW. The analysts believe that while the current account surplus and BoK's strong fundamentals will maintain support for the KRW, the recent rally is likely to be more gradual, resulting in consolidation around 1,330-1,380 for USD/KRW in the near term.
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