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South Korean won firms as BoK turns hawkish and equities correct

Brown Brothers Harriman says the BoK raised rates 25 bps to 2.75%, and a sharp KOSPI correction has eased KRW selling pressure from global equity risk trimming.

Reported · Written up by our desk · Major Pairs

Brown Brothers Harriman, via strategist Elias Haddad, said the South Korean won is outperforming, citing support from a more hawkish stance by the Bank of Korea. The BoK raised the policy rate by 25 bps to 2.75% after holding rates steady for the prior year, the firm noted.

BBH also pointed to expectations that South Korea’s growth and core inflation will be above the 2026 outlook, which it said helps underpin the currency. The bank added that the won is significantly undervalued, estimating it at about 11% below trend based on the real effective exchange rate.

On market flows, BBH said a sharp KOSPI correction after earlier outperformance reduces the need for global investors to trim Korean equity exposure. That, in turn, lowers a key source of KRW selling pressure.

BBH added that it views the outlook as encouraging, linking it to the start of BoK tightening and steps by the South Korean government to internationalize the won.

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