Volatility of the South Korean Won: A Macro Analysis

In early 2023, there was an abrupt decline in the value of the South Korean won (KRW) against the US dollar (USD), with a drop of approximately 8%. ING highlighted that this volatility was primarily driven by temporary movements such as Hynix's repatriation of assets and adjustments made by the National Pension Service’s hedging strategy. However, the report also notes that the Bank of Korea's (BoK) more hawkish stance has contributed positively to the stability of the KRW. The analysis suggests that despite these immediate fluctuations, macroeconomic fundamentals both regionally and globally remain favorable for the South Korean won. This movement reflects regional dynamics as well as global trends related to demand for advanced technology and monetary adjustments in developed economies like the United States.