MUFG notes sturdy growth in Korean exports, particularly semiconductors, but says KRW has underperformed due to enormous foreign capital outflows and AI valuation concerns. Due to the end of the Bank of Korea’s monetary easing cycle and increased KRW volatility, MUFG expects trade volatility, although its forecasts point to a gradual decline in the USD/KRW rate through 2026.
Capital outflows hit the Korean won
“That said, we continue to believe that the BoK’s monetary easing cycle is over, given improving economic fundamentals, financial stability risks related to the Seoul housing market, and increased KRW volatility.”
“The KRW underperformed in Asia this week, registering a 2% depreciation against the US dollar, given significant net foreign capital outflows ($5.3 billion) driven by AI valuation concerns and broader risk-free sentiment.”
“As a result, the KOSPI index also declined by 2.7% to 5,100 at the end of the week.”
(This article was created with the facilitate of an artificial intelligence tool and has been reviewed by an editor.)
