KRW/USD Outlook: Slightly positive, but likely to move sideways as the exchange rate is near its 90-day average and lacks a clear driver.
Key drivers:
• Rate gap: The Bank of Korea's cautious interest rate policy contrasts with the Fed's expected rate cuts, providing some support for the won.
• Risk/commodities: With Brent Crude OIL/USD trading below average, lower oil prices may soften inflationary pressures, benefiting the KRW indirectly.
• One macro factor: Capital inflows and projections of KRW appreciation in the first quarter suggest potential strength, countering current USD weakness.
Range: Movement is likely to drift within the recent range as both currencies react to ongoing geopolitical and economic developments.
What could change it:
• Upside risk: An unexpected improvement in U.S. economic data could bolster the USD, pressuring the KRW.
• Downside risk: Escalation in geopolitical tensions involving the U.S. could further weaken the USD and impact the KRW negatively.
