KRW/USD Outlook:
Likely to increase, as the exchange rate is above its recent average and supported by strengthened US economic data.
Key drivers:
- Rate gap: The Bank of Korea's concerns over KRW weakness and inflation risks contrast with the stable monetary policy of the Federal Reserve, which has kept interest rates steady.
- Risk/commodities: The decline in oil prices amid broader economic concerns may lead to a risk-off approach, benefiting the USD.
- One macro factor: Recent data shows that the US labor market remains robust, with non-farm payrolls exceeding expectations and a drop in unemployment.
Range:
The KRW/USD rate is likely to drift within a stable range, holding just above the recent average.
What could change it:
- Upside risk: If South Korea implements effective measures to stabilize the KRW against volatility.
- Downside risk: Continued geopolitical tensions could further weaken the USD if markets react negatively.
