South Korean Won: Leads Asia FX on tech support – MUFG

Lloyd Chan at MUFG highlights that the Korean Won has outperformed regional peers, helped by a softer Dollar and a resilient semiconductor and AI investment cycle supporting exports and inflows. Despite sharp recent appreciation, he judges the Won still undervalued after years of underperformance, though USD/KRW now looks oversold and vulnerable to near-term consolidation.

Won outperforms but consolidation risk

"The Korean won has outperformed regional peers this month."

"Beyond a softer dollar backdrop, the won is also supported by a resilient semiconductor and AI investment cycle, supporting exports, earnings, and portfolio inflows."

"Importantly, despite the sharp appreciation seen recently, the won remains undervalued after several years of underperformance."

"That said, USD/KRW appears increasingly oversold in the near term and may be vulnerable to consolidation."

"The broader takeaway remains that a less supportive USD environment is creating opportunities for selective Asia FX outperformance, with KRW continuing to stand out as one of the preferred expressions of that theme."

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