South Korean Won: Modest gains amid two-way risks – OCBC

USD/KRW is projected at 1320 by end-2026. OCBC strategists Sim Moh Siong and Christopher Wong forecast 1260 by end-2027, signalling moderate but uneven appreciation for the Korean Won (KRW). Near-term volatility remains high given the currency’s high-beta characteristics, elevated US yields and the prospect of further Fed rate increases. Over the medium term, resilient exports and robust demand for AI-related semiconductors support a constructive outlook as USD strength eases.

1320 by end-2026: Won recovery faces an uneven path

"Recovery bias but unlikely a straight line. We expect KRW to appreciate moderately into 2027, with USD/KRW projected at 1320 at end-2026 and 1260 at end-2027. The recovery is unlikely to be a straight line, given KRW’s high-beta characteristics and sensitivity to global risk sentiment and portfolio flows."

"Korea’s export resilience and continued strength in AI-related semiconductor demand should provide support, while expectations for hawkish Fed repricing to unwind and USD strength to moderate reinforce our medium-term constructive bias."

"Near term, however, still-elevated US Treasury yields and expectations of another Fed hike could sustain two-way volatility, while resident overseas investment flows may continue to complicate KRW’s response to equity market strength."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)