The South Korean Won has experienced a significant rally, with USD/KRW dropping 15% since June, a move comparable to the currency's performance in 2022 [1]. According to ING’s Chris Turner, the rebound in USD/KRW from 1335 was triggered by news that Korea’s National Pension Service (NPS) may halt or reverse its forward-market Dollar selling [1]. This change in NPS FX hedging was initially introduced in June as a measure to support the won, which had been under pressure [1].
The latest developments suggest that Korean authorities are now comfortable with the extent of the won's appreciation and are signaling a pause in further strengthening for the time being [1]. ING analysts favor consolidation in both USD/KRW and USD/JPY, indicating that reduced Dollar selling in these pairs could support the broader Dollar tone in the FX market [1].
No specific market reactions or forward-looking analyst opinions beyond ING’s preference for consolidation and a stronger Dollar tone were mentioned in the article [1].
CONCLUSION
South Korean authorities appear satisfied with the won's recent gains, prompting a potential pause in further appreciation. ING expects consolidation in USD/KRW and USD/JPY, with reduced Dollar selling likely to support the Dollar more broadly. The market takeaway is a shift toward stability in the won and a firmer Dollar outlook.