Global investment banks see Korean won staying weak in 2025

As political uncertainties linger in the country, investment banks have turned bearish on the won currency

A currency exchange counter in Myeong-dong, Seoul (Courtesy of Yonhap)
A currency exchange counter in Myeong-dong, Seoul (Courtesy of Yonhap)
Jin-gyu Kang 1
2024-12-31 20:24:02 joseph@hankyung.com
Foreign exchange

The South Korean won is forecast to hover in the mid-1,400s level against the dollar through the third quarter of 2025, according to global investment banks.

They said the political uncertainties in the aftermath of President Yoon Suk Yeol’s impeachment will likely drag down Asia’s No. 4 economy for some time, according to the Korea Institute for International Economic Policy (KIEP) on Tuesday.

Before Yoon’s ill-fated martial law decree in early December, a majority of global banks expected the won to rebound to the 1,200 level against the greenback in the second quarter of 2025.

Global IBs have since revised their dollar/won forecast by a large margin to factor in the political turmoil, which drove down the won to a 15-year low last week.

A Bloomberg analysis of their dollar/won projections showed that their median forecast for the Korean currency was 1,435 against the greenback in the first quarter of 2025, the KIEP said in a document submitted to a lawmaker of the main opposition Democratic Party.

That marks a sharp revision to their previous median forecast of 1,305 in November 2024.

Nomura Securities forecast the won at 1,460 per dollar in the first quarter of 2025, compared with its earlier projection of 1,300.

Standard Chartered expects the Korean currency to recover to 1,405 to the dollar in the first quarter of 2025. But it expects the won to fall back to 1,440 in the second quarter.

In late 2024, Standard Chartered had predicted the won strengthening to 1,300 in the first quarter of 2025.

On Dec. 27, the won plummeted to 1,467.5 to the dollar — a level not seen since the 2009 global financial crisis.

To prop up the won, the Bank of Korea and the Ministry of Economy and Finance have intervened in the market with dollar selling, which foreign exchange dealers said remained at a modest level. 

The KIEP warned against any massive dollar-selling intervention over an extended period, saying it would chip away at the country's foreign exchange reserves and lead to a fall in the country's credit rating.

Write to Jin-gyu Kang at joseph@hankyung.com
 

Yeonhee Kim edited this article.
#KIEP #dollar/won #KoreaInstituteforInternationalEconomicPolicy #NomuraSecurities #StandardChartered

South Korea jumps to world’s No. 6 exporter; 2025 outlook dims

South Korea jumps to world’s No. 6 exporter; 2025 outlook dims

South Korean port of Busan  South Korea has sharply narrowed the gap in export value with Japan to a record low of $20.2 billion so far this year. But the country’s export outlook for next year is grim as it faces looming political, trade and social headwinds. The value of Korea&rsqu

South Korea’s Acting President Han impeached; Stocks, won plummet

South Korea’s Acting President Han impeached; Stocks, won plummet

National Assembly Speaker Woo Won-shik Han Duck-soo, South Korea’s acting president and prime minister, was impeached in Parliament on Friday amid a deepening political crisis battering the already weak economy, Asia’s fourth-largest.This marks the first time in the nation’s h

South Korea to ease foreign exchange regulations, expand FX swap line

South Korea to ease foreign exchange regulations, expand FX swap line

Kim Beom-seok, first vice minister of economy and finance, presides over an emergency economic meeting to announce measures to ease Korea's forex regulations South Korea’s foreign authorities said on Friday they will ease foreign exchange regulations to allow more dollars into the domesti

Korean won seen rebounding after Yoon’s impeachment

Korean won seen rebounding after Yoon’s impeachment

President Yoon Suk Yeol said he would never give up, in a nationally televised speech after parliament voted to impeach him on Dec. 14 (Courtesy of Yonhap) The South Korean won is expected to stage a rebound from its two-year low against the US dollar and hold steady in 2025 after the impeachme

South Korea’s sovereign credit rating stable: S&P, Moody's, Fitch

South Korea’s sovereign credit rating stable: S&P, Moody's, Fitch

Finance Minister Choi Sang-mok (left) holds a virtual meeting with executives of S&P, Moody's and Fitch to discuss Korea's sovereign ratings following the botched martial law declaration South Korea’s sovereign ratings remain stable despite the political turmoil caused by the short-li

South Korea’s economic system remains resilient: finance minister

South Korea’s economic system remains resilient: finance minister

Korea’s Finance Minister Choi Sang-mok (center) speaks at an emergency economic policy meeting on Dec. 8, 2024 (Courtesy of News1 Korea) The South Korean economy is solid, and the government will take “bold and swift’’ actions if needed to stabilize Asia’s fourth-l

South Korea’s president apologizes for martial law

South Korea’s president apologizes for martial law

South Korean President Yoon Suk Yeol apologizes for martial law in a nationally televised speech on December 7, 2024 (Courtesy of Office of the President of the Republic of Korea) South Korea's President Yoon Suk Yeol apologized to the public for causing “discomfort and anxiety” wit

South Korea president to lift martial law after Parliament rejects move

South Korea president to lift martial law after Parliament rejects move

.video-container {} .video-container { position:relative; aspect-ratio: 16/9; } .video-container iframe { width:100%; height:100%; } .caption { letter-spacing: .2px; color: #616161; font-size: 13px; text-align: left; word-break: break-word; line-h
(* comment hide *}