South Korean Won: Moderate appreciation comes with two-way risks – OCBC

USD/KRW forecasts of 1320 by end-2026 and 1260 by end-2027 from OCBC strategists Sim Moh Siong and Christopher Wong point to moderate appreciation in the Korean Won (KRW), though the path is unlikely to be smooth. Resilient exports and robust demand for AI-related semiconductors support a constructive medium-term outlook as USD strength eases. In the near term, however, the currency’s high-beta characteristics, elevated US yields and the possibility of further Fed rate rises continue to fuel high volatility.

Won faces uneven recovery

"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. Know more.)