USD/KRW Outlook:
Slightly positive, but likely to move sideways, as the rate remains above its recent average without a clear driver.
Key drivers:
• Rate gap: The Federal Reserve has retained interest rates steady, while the Bank of Korea is concerned about KRW weakness impacting inflation and domestic businesses.
• Risk/commodities: Oil prices are trending lower, which may support the won by easing inflation concerns linked to energy costs.
• One macro factor: South Korea’s finance ministry plans to stabilize KRW volatility, signaling active government measures to combat currency pressure.
Range:
The USD/KRW is expected to hold within its recent range as the market assesses competing domestic and international influences.
What could change it:
• Upside risk: A sudden shift in US economic data could bolster the USD against the KRW.
• Downside risk: Further intensification of geopolitical tensions could lead to a broad USD decline.
