South Korean Won: Rally accelerates with foreign inflows – DBS

DBS strategist Chang Wei Liang reports that South Korean Won (KRW) strength has resumed, with USD/KRW dropping to the mid-1380s even as KOSPI fell nearly 6% on semiconductor-led losses. He attributes this to foreign investors using the equity correction to add Korean stocks, funded by USD selling, while warning that tech volatility and a less undervalued KRW justify some caution.

Foreign equity buying lifts korean won

"KRW rally picked up pace again, with USD/KRW tumbling to mid-1380 levels despite a KOSPI sell-off of close to 6% yesterday, led by semiconductors."

"Foreign investors are seemingly taking advantage of the correction to invest into Korean equities, with reports of custodian banks selling off USD to settle foreign purchases of equities."

"We have been optimistic on KRW with markets previously failing to appreciate Korea’s solid economic fundamentals and rising terms of trade due to surging memory prices, but volatility around tech stocks and a less undervalued KRW could be reason for some caution now."