The Korean Won is expected to appreciate by around 5% during 2023 according to analysts at MUFG Bank. They see the USD/KRK at 1340 by the end of the first quarter and at 1240 by the end of 2023.
Won to turn positive during the second half of 2023
“Given the possibility of recovery in US dollar value till late 1Q or early Q2, 2023, we see some increase of USD/KRW during the period. However, when Fed eventually pivots, improving interest rate spread with US, a weakening US dollar, and Won’s undervaluation, these factors likely push Won to strengthen against the USD till the end of 2023.”
“Overall, we expect a roughly 5% appreciation for Won in 2023, which is still not enough to retrace its depreciation in 2022, due to the considerations that as an export-reliant economy and a net importer of energy, the country’s trade deficit likely continues to run large, as external demand weakens due to recessions in Europe and the US, energy prices stay high due to supply constraints, and tech sector probably still remains weak.”
“We expect USD/KRW to rise to 1340 at 1Q 2023 then fall to 1240 by the end of 2023.”
