The current market bias for the USD to KRW exchange rate is bearish.
Key drivers include a shift in Federal Reserve policy, with anticipated rate cuts putting downward pressure on the USD. At the same time, the Bank of Korea is addressing inflation concerns due to a weakening KRW, which could further impact the exchange rate. Persistent weakness in the KRW is expected as policies and increased investments from South Korea contribute to a volatile environment.
In the near term, the exchange rate is expected to fluctuate within a stable range, reflecting the current dynamics, given that USD to KRW is just above its three-month average.
An upside risk could emerge if global economic growth shows significant improvement, boosting confidence in the USD. Conversely, a downside risk is present if the Bank of Korea successfully stabilizes the KRW, potentially limiting its depreciation against the USD.