Won strength limited through year-end as corporate dollar flows fade: State Street
The won's strength is expected to be limited through year-end as domestic corporate dollar-selling flows fade, despite economic conditions remaining broadly supportive of the currency, U.S. financial firm State Street said Thursday. "Near-term conditions are clearly supportive," Choi Ji-uk, senior APAC macro strategist at State Street, said at a media roundtable. "But given how significantly the…
State Street forecasts that the Korean won's strength will remain limited until the year-end, despite favorable economic conditions, according to a report on Thursday. Senior APAC macro strategist Choi Ji-uk stated that while near-term conditions support the currency, the won's significant appreciation compared to the end of last year is expected to lead to a decrease in corporate dollar-selling demand.
State Street transitioned to an underweight position on the won two weeks ago. The Korean currency experienced a 15.41% increase against the dollar in the third quarter, reaching its strongest performance among G20 currencies. The rate rose from 13.6 won to 1,382.2 per dollar on Thursday as the Federal Reserve resumed monetary tightening.
Choi explained that the primary source of dollar-selling flows related to SK hynix's American depositary receipts has largely diminished. Additionally, a corporate tax cut aimed at encouraging companies to sell their dollar holdings to fulfill tax obligations has added downward pressure on the currency.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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