UBS Sees Strong Korean Won, USD/KRW to Fall Below 1400

UBS Bullish on South Korean Won

UBS maintains a positive outlook on the South Korean won, forecasting the USD/KRW exchange rate could fall below 1400 during the second half of 2026. This projection is driven by strong fundamentals and anticipated capital inflows.

Favorable Economic Indicators

The financial firm notes the won is currently undervalued, trading more than 5% cheap relative to its export share. A key driver is the projected memory-led export growth, which UBS expects to surpass 250% year-over-year in 2026. South Korea’s current account surplus is also forecasted to remain robust, staying above 10% of its gross domestic product.

Impact of Capital Inflows

The balance of payments is expected to improve by at least 5 to 6 percentage points in 2026 compared to 2025. This improvement will be further supported by the inclusion of Korean Treasury Bonds in the World Government Bond Index, which is anticipated to attract significant foreign investment and bolster the currency.

Summary

Overall, UBS's analysis points to a significant strengthening of the won, supported by attractive valuations, a strong current account, and future capital inflows. The firm's target highlights a clear downward trend for the USD/KRW pair in the medium term.

FAQ

Q: What is UBS's forecast for the USD/KRW exchange rate?
A: UBS forecasts the USD/KRW rate will fall below the 1400 level during the second half of 2026.

Q: What are the main reasons for the won's expected strength?
A: Key drivers include strong balance of payments, significant memory-led export growth, and inflows from the inclusion of Korean bonds in the WGBI.

Source: Investing.com