"Recovery in risk-asset preference sentiment… won·dollar exchange rate expected to fall slightly"

Woori Bank on the 1st forecast that the won·dollar exchange rate would trade in the 1460~1470 won range. This view is based on expectations that buying pressure in New York tech stocks will flow in, improving foreign investors' sentiment toward won-denominated risk assets. It also pointed out that expectations of a rate hike by the Bank of Japan (BOJ) are a factor for exchange rate decline.

Min Kyung-won, an economist at Woori Bank, said, "Although the New York market closed early, it rose mainly on tech stocks, and foreign investors' sentiment toward won-denominated risk assets is expected to improve." On the 28th of last month (local time), the Nasdaq index in the New York market rose 0.65% from the previous day.

He added, "Verbal intervention and fine-tuning by authorities and profit-taking selling by exporters were observed in the 1470 won range," and said, "The fact that the yen, which tends to move in tandem with the won, is likely to appreciate is also a factor pointing to a decline in the won·dollar exchange rate." BOJ officials have recently made successive hawkish (preference for monetary tightening) remarks.

However, he noted that importers' payments and currency exchange demand for overseas stock investment are factors supporting the downside of the won·dollar exchange rate. Economist Min said, "The exchange rate's upward trend has stalled, but importers are maintaining an aggressive low-price buying strategy," and added, "The foreign investment currency exchange demand that recorded large net settlements in the US stock market in October–November also limits the downside."

Finally, Min said, "While the won·dollar exchange rate will face downward pressure from the resumption of foreign net stock purchases, offshore custody selling, and inflows of negotiation volumes from domestic exporters, it is expected to fluctuate in the low-to-mid 1460 won range, constrained by low-price buying."

Jin Young-gi Hankyung.com reporter young71@hankyung.com