ING economists cite an 8% drop in USD/KRW this quarter, driven by chip exports and hawkish Bank of Korea policy.
The Korean won strengthened sharply in the second quarter, with USD/KRW falling 8% due to temporary flows like Hynix’s $16bn ADR repatriation and National Pension Service hedging adjustments. The Bank of Korea’s hawkish July rate hike also supported the currency.
Strong chip exports and AI-related investment are fueling domestic demand, keeping inflation above target. Markets now price in an additional 50 basis points of BoK tightening by year-end. High volatility persists, but a stable Fed and ongoing AI demand may sustain KRW gains.