South Korean Won: AI-driven exports support KRW outlook – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank highlights South Korea’s exports rising over 50% year-on-year in early July, marking a seventh month of double-digit growth, driven by semiconductors and AI-related data centre demand. The Bank of Korea (BoK) has started a tightening cycle, projecting a Base Rate near 3.0%, while officials expect stronger corporate USD-forward selling and capital inflows to support Korean Won appreciation despite recent USD/KRW gains.

BoK hikes as AI demand boosts trade

"South Korea’s exports in the first 20 days of July rose 52.3% yoy vs 60.4% in the same period of June. This marked the seventh consecutive month of double-digit export growth, suggesting external demand remains resilient despite ongoing supply chain disruptions linked to renewed tensions in the Middle East."

"On monetary policy, the Bank of Korea (BoK) hiked rates by 25bp to 2.75% last week, the first time in three years. It cited elevated price pressures and financial stability risks due to a weak KRW and rising home prices."

"It is expected to hike by another 25bp this year, taking the Base Rate to 3.0%. This will be in line with the BoK’s median rate projection in the latest dot plot."

"In FX, USD/KRW rose by 0.3% to 1,482 yesterday due to the firmer USD. Nonetheless, Deputy Finance Minister Moon Ji-sung sounded optimistic that KRW could strengthen due to increased corporate selling of USD forwards in H2. He said that this could “shift retail investor sentiment, further accelerating the KRW’s appreciation”."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.