USD/KRW Outlook:
The USD/KRW exchange rate is likely to decrease, as it trades below its recent average and is near recent lows. The pressure from weakened economic indicators in the US, along with ongoing challenges faced by the South Korean economy, supports this outlook.
Key drivers:
• Rate gap: The widening interest rate gap favors the USD, making it more attractive compared to the KRW.
• Risk/commodities: Oil prices remain volatile, influencing global investment flows, which tend to favor the dollar in times of uncertainty.
• One macro factor: South Korea's persistent currency weakness is linked to low economic growth and forecasts suggesting further KRW depreciation.
Range:
The USD/KRW is likely to drift within its recent range, given the stable patterns observed in the past months.
What could change it:
• Upside risk: A surprising recovery in US economic data could strengthen the USD against the KRW.
• Downside risk: Effective government interventions in South Korea to stabilize the KRW could enhance its value relative to the USD.