USD/KRW Outlook:
The USD/KRW rate is currently below its recent average and near recent lows, suggesting it is likely to decrease. The ongoing geopolitical uncertainties support the US dollar, but pressure from concerns about the South Korean won's weakness looms.
Key drivers:
• Rate gap: The Federal Reserve’s recent rate hikes support the USD, while the Bank of Korea expresses concerns over KRW depreciation.
• Risk/commodities: Geopolitical tension boosts demand for the safe-haven USD, keeping it strong against the KRW.
• One macro factor: The Bank of Korea has signaled readiness to intervene in foreign exchange markets to stabilize the KRW.
Range:
The USD/KRW is expected to drift within its recent range, with potential tests toward lower levels.
What could change it:
• Upside risk: A stronger-than-expected US producer price index release could further support the USD.
• Downside risk: Any effective intervention by the Bank of Korea to stabilize the KRW may weaken the USD/KRW rate.
