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

OCBC strategists Sim Moh Siong and Christopher Wong project USD/KRW at 1320 by end-2026 and 1260 by end-2027, implying a moderate Korean Won (KRW) appreciation path that is unlikely to be linear. High-beta characteristics, elevated US yields and potential further Fed hikes keep near-term volatility high, while resilient exports and strong AI-related semiconductor demand underpin a constructive medium-term view as USD strength moderates.

Won recovery but choppy 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. Know more.)