The USD to KRW exchange rate has experienced notable fluctuations recently, influenced by various economic factors in both the United States and South Korea. The US dollar has been on a downward trajectory, largely due to expectations of aggressive monetary easing from the Federal Reserve starting in 2026. Analysts cite a recent drop in the US Consumer Price Index (CPI) from 3% to 2.7% as a significant factor that has contributed to a selling bias for the USD. Market sentiment is currently leaning towards the probability of multiple rate cuts by the Fed as early as mid-2026. As this narrative gains traction, the dollar's relative yield advantage is diminishing, exerting downward pressure on its value.
On the other hand, the South Korean won has been facing its challenges, recently depreciating to around 1,472.5 KRW per USD, a level last seen during the 1997 financial crisis. This weakening is attributed to domestic political instability and broader external economic concerns. The Bank of Korea has expressed that a continued weak KRW could push inflation into a higher range, prompting authorities to take measures such as extending foreign exchange swap transactions to stabilize the currency. This proactive approach aims to mitigate volatility, especially as Forex analysts highlight that the USD/KRW rate is expected to fluctuate between 1,350 and 1,400 in the near term due to opposing market forces.
Overall, the USD/KRW exchange rate has remained relatively stable in recent months, trading within a 5.8% range from 1,400 to 1,481. Given the current economic indicators and geopolitical sentiments, the currency pair is projected to remain influenced by the Fed's policy signals and South Korea’s economic stability efforts. Monitoring upcoming economic indicators in both the US and South Korea will be critical for traders and businesses engaged in international transactions.
