South Korean Won: Watching 200dma and BoK – Societe Generale

Societe Generale analysts highlight USD/KRW’s failure at the June peak near 1,561 and subsequent decline toward the 2024–2025 highs, with the 200-day moving average around 1,475 as key support. They see scope for a short-term rebound if that level holds, while expecting the Bank of Korea (BoK) to tighten policy by 25bp to 2.75% to counter inflation.

Won outperforms as policy tightens

"USD/KRW struggled to break above the June peak near 1,561 on its second attempt earlier this month, resulting in a steady decline toward the graphical level corresponding to the 2024/2025 highs. The 200-DMA, near 1,475, could be an important support in the near term. Notably, the previous downswings in February and May bottomed out around this moving average."

"The KRW has emerged as the best-performing Asian currency halfway through July, climbing 4% total return against the USD, while INR has lagged with a 1.2% decline total return. USD/KRW has been a one-way trade, retracing to 1488 after peaking at 1559 on 1 July. The 200dma runs at 1475."

"FX conversion flows linked to the ADR listing of SK Hynix offset the correction in the Kospi and FPI outflows. Local market participants reported sizeable dollar selling by Korean chipmakers and shipbuilders this week. Reports also emerged that Samsung is in the early stages of discussions over a potential US share sale. "

"This would be another fillip for the KRW. FX gyrations aside, we believe the BoK is on track to tighten 25bp to 2.75% tomorrow to counter inflation. BoK data revealed that non-resident sales of Korean equities and bonds totalled $100.93bn in 1H26."

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