The USD/KRW exchange rate experienced a sharp decline of 8% earlier in the second quarter, driven by a combination of temporary market flows and a hawkish rate hike from the Bank of Korea, according to FX Street.
Key factors contributing to the drop included repatriation flows from Hynix ADRs and hedging adjustments by South Korea’s National Pension Service. These elements, alongside the central bank’s more aggressive stance on monetary policy, combined to significantly strengthen the Korean won against the US dollar.
For Japanese investors, this movement highlights the dynamic nature of FX markets in the region, emphasizing the importance of monitoring South Korean monetary policy and institutional flows when considering exposure to Korean assets or cross-border investments.