Home›Forex›Major Pairs›Won steadies as hawkish BoK and AI demand support KRW

Won steadies as hawkish BoK and AI demand support KRW

ING economists point to an earlier 8% USD/KRW drop in the second quarter, attributing it to temporary repatriation and hedging flows alongside Bank of Korea tightening expectations.

Reported · Written up by our desk · Major Pairs

ING economists Deepali Bhargava and Lynn Song said the South Korean won is being supported against the US dollar by a mix of policy and demand forces, including a hawkish stance from the Bank of Korea and continued AI-related investment.

They noted USD/KRW fell sharply earlier in the second quarter, with the pair down about 8%, and linked the move partly to temporary currency flows such as Hynix ADR repatriation and National Pension Service hedging adjustments.

The analysts added that strong chip exports and AI-linked investment are keeping inflation above target, which they said supports further BoK tightening. ING’s economists said the market is now pricing another 50bp of hikes by year-end.

FXStreet also highlighted that USD/KRW has been trading with very high annualized volatility around 12% per year, while arguing that a stable Fed alongside the hawkish BoK and ongoing AI demand can help underpin the won.

More like this

Sources