USD/KRW Outlook:
Slightly weaker, but likely to move sideways, as the rate is currently below its 90-day average and near recent lows.
Key drivers:
• Rate gap: The Federal Reserve's steady interest rates signal stability, whereas the Bank of Korea is concerned about the weakening KRW affecting inflation.
• Risk/commodities: Recent declines in oil prices may negatively influence the KRW since South Korea is an oil importer.
• One macro factor: The South Korean government’s proactive measures to stabilize the KRW amid volatility may provide some support, yet concerns over inflation persist.
Range:
Expect the USD/KRW to hold within its recent range as it stays near the lower end of its three-month trading band.
What could change it:
• Upside risk: A stronger-than-expected US economic performance could further strengthen the USD.
• Downside risk: Any significant intervention by South Korea’s government to stabilize the KRW could lead to a stronger won against the dollar.
