South Korean Won: Supportive fundamentals, slower gains – Commerzbank

Commerzbank’s FX analysts Charlie Lay and Moses Lim note that the Korean Won has rallied nearly 15% against the Dollar since late June, driven less by the current account surplus and more by structural shifts in flows. They highlight increased NPS FX hedging, corporate ADR-related repatriation and strong BoK-backed fundamentals, but expect USD/KRW to consolidate around 1,330–1,380 near term as authorities temper further appreciation.

Won rally meets structural flow shifts

"However, after appreciating by nearly 15% against USD since end-June, the easy gains may be behind us."

"BoK expects the current-account surplus to reach a record USD450bn in 2026 and remain elevated at USD430bn in 2027, driven by the semiconductor export boom, while its back-to-back rate hikes and continued tightening bias provide additional support."

"The current account surplus and Bank of Korea’s hawkish tone should provide continued support for KRW but given the strong rally, we look for consolidation in the near term."

"As such, further KRW appreciation is likely to be more gradual, and we look for USD/KRW to consolidate around 1,330-1,380 in the near term."