Commerzbank analysts cite strong export growth and corporate repatriation flows as key drivers for KRW strength against USD.
The South Korean Won has strengthened against the USD, driven by the country’s robust export-led growth and a large current-account surplus. Analysts highlight that reduced financial-account offsets, including increased National Pension Service hedging and corporate repatriation, have allowed surplus flows to support the currency more directly.
KRW had previously remained weak despite persistent surpluses, as overseas portfolio investments absorbed much of the foreign exchange inflows. Recent shifts, such as proceeds from a major semiconductor company’s US listing, have diminished these offsets, bolstering the Won’s position.
Expectations of further tightening by the Bank of Korea, as indicated in July’s Monetary Policy Committee minutes, provide additional support. Analysts anticipate USD/KRW consolidation near current levels, citing prior appreciation and tighter financial conditions as limiting factors.