The South Korean Won (KRW) has outperformed most currencies, buoyed by robust performance in South Korean equities and hawkish guidance from the Bank of Korea (BoK) Governor Shin Hyun Song [1]. The KOSPI index experienced a sharp rise, jumping as much as 8.5% before settling 4.6% higher, with year-to-date gains reaching an impressive 92%, making it the world’s best performing equity market. This surge is attributed to the AI-led semiconductor boom, with Samsung Electronics and SK Hynix accounting for a significant portion of the index [1].
BoK Governor Shin Hyun Song reiterated the importance of prioritizing price stability, stating, 'it is necessary to place priority on price stability and raise interest rates before it is too late.' At the May 28 meeting, the BoK kept its policy rate unchanged at 2.50% for the eighth consecutive meeting, but Shin emphasized that the Board 'judged necessary to raise the Base Rate at an appropriate time' [1].
Looking ahead, Brown Brothers Harriman (BBH) notes that a 25 basis points hike to 2.75% at the upcoming July 16 BoK meeting is increasingly likely, reflecting the central bank’s hawkish stance [1]. The combination of strong equity performance and expectations of tighter monetary policy has provided substantial support for the KRW [1].
CONCLUSION
The South Korean Won and KOSPI have seen significant gains, driven by AI-led semiconductor strength and hawkish signals from the Bank of Korea. Market participants are increasingly expecting a 25bps rate hike at the July 16 meeting, which could further bolster the KRW. The outlook remains positive as price stability and asset performance continue to be prioritized.