Strategists are forecasting a potential rebound for the Korean Won, anticipating that easing global risks and fresh foreign capital inflows could drive the currency back to levels seen before the US-Iran tensions flared in the second quarter. The currency recently dipped to 1,484.55 on Thursday after a streak of seven consecutive gains.
The optimism stems from stabilizing commodity prices and growing signs of global capital returning to the South Korean stock market. These combined factors are fueling expectations of a significant currency recovery.
Analyzing Strategist Views on Won's Trajectory
Multiple leading financial institutions are pointing towards a marked appreciation for the Won. Woori Bank suggests the currency could climb to 1,420 per dollar, representing a projected 4% gain from current trading levels.Meanwhile, NH Investment & Securities and KB Kookmin Bank have offered slightly higher targets, anticipating the Won may stabilize around the 1,450 mark, which is close to the 1,440 level seen prior to the conflict escalation.
Economist Gyeong-Won Min from Woori Bank noted that any easing of Middle East uncertainties would help unwind overexposure to the dollar. He added that robust underlying demand and supply conditions tied to Korea's fundamentals should support a fast rebound if foreign investors increase net buying of Korean equities.
Pillars Supporting a Korean Won Rebound
The downward pressure on the Won has been mitigated by positive momentum in foreign investment flows. Crucially, overseas investors recorded net buying for two consecutive sessions, purchasing $1.3 billion worth of assets on Wednesday.Furthermore, strong first-quarter earnings have emerged as a key support factor. Ahmin Kwon, an economist at NH Investment & Securities, stated that current foreign exchange levels, when paired with solid corporate earnings, present an attractive bargain for international investors.
Key Risks Keeping the Korean Won Volatile
Despite the bullish sentiment, caution remains among market analysts due to persistent geopolitical uncertainties. Shaun Lim, an FX strategist at Malayan Banking Berhad, cautioned that the current ceasefire appears fragile.He warned that reopening critical shipping lanes like the Strait of Hormuz cannot happen instantly, and oil production normalization will take time. Consequently, he suggests that the Won might approach 1,500 by the end of the quarter, citing that any breach of the ceasefire would bolster the dollar.
Despite the conflicting views, the simultaneous combination of falling oil prices easing import pressures and observable capital returns continues to build momentum toward a potential strong recovery for the Korean Won.
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