USD/KRW: Volatility to stay high on flows – MUFG

💡 DMK Insight

Korean exports are booming, but the KRW is lagging—here’s why that matters: MUFG’s observation on strong semiconductor exports highlights a critical growth sector for South Korea, yet the KRW’s underperformance signals deeper issues. Heavy foreign equity outflows suggest that international investors are pulling back, likely due to concerns over AI valuations impacting tech stocks. This creates a tricky environment for traders, especially those looking at forex pairs involving the KRW. If the KRW continues to weaken, it could impact import costs and inflation, potentially leading to a tighter monetary policy from the Bank of Korea. Traders should keep an eye on the KRW/USD pair, particularly if it breaks below key support levels. A sustained downtrend could trigger further selling pressure, while any rebound in foreign investment could provide a short-term lift. Watch for updates on foreign equity flows and any shifts in AI-related stock performance, as these will be pivotal in shaping market sentiment around the KRW in the coming weeks.