Stable Fed and AI Demand Support Won; USD/KRW Drops 8% in Q2
The South Korean won strengthened as USD/KRW fell 8% earlier in the second quarter, driven by the U.S. Federal Reserve's stable stance and AI-related capital flows, ING economists noted.
ING economists Deepali Bhargava and Lynn Song point to a sharp 8% decline in USD/KRW during the early second quarter. They attribute the move to a combination of temporary flows and a hawkish Bank of Korea.
Key factors include repatriation of Hynix’s ADR proceeds on AI demand and hedging adjustments by the National Pension Service. These inflows coincided with a still-hawkish central bank, amplifying the won’s rally.
The stable policy backdrop from the Federal Reserve also helped support the Korean currency against the dollar, the economists said.
Source: FXStreet Forex News