Korea's emergency rate hike... "Funds flowing into the US, Japan, and Switzerland"

Monthly Outlook on the Korean Market Situation

Evercore ISI "Special Attention Needed for Korea"

TS Lombard “Presidential Impeachment Could Lead to Early Elections Next Year”

The emergency rate hike announced by President Yoon Seok-yeol has led to a rapid increase in the value of the Korean Won in the foreign exchange market. However, investors in the US stock market believe that this situation will not last long.

The USD/KRW exchange rate rose sharply after the emergency rate hike, reaching up to 1440 KRW. Before the emergency rate hike, the USD/KRW exchange rate was 1402 KRW, and after the announcement, it jumped to 1410 KRW, then 1420 KRW, 1430 KRW, and finally 1440 KRW. The USD/KRW exchange rate peaked at 1442.00 KRW. This is the highest level since the peak of 1444.20 KRW on October 25, 2022.

The US economic analyst MarketWatch analyzed that “the rapid rise of the Korean Won is due to funds flowing into major safe asset markets such as the US, Japan, and Switzerland.”

Monthly Outlook warned that this situation should be continuously monitored. According to MarketWatch, Chrisna Guhar, vice president of Evercore ISI, stated, “Korea plays an important role in the global supply chain, so special attention is needed.” TS Lombard's strategist Rory Green warned that “there is a possibility of early elections next year after President Yoon's impeachment.” Beck O'New York Mellon (BNY)'s market strategist and insight manager Bob Savidge stated, “The political volatility in Korea is likely to continue even after the emergency rate hike ends in the short term.” He added, “The tension between the National Assembly and the President, as well as the expectation of changes in US policy, will be a major test for Korean policymakers.”

New York = Park Shin-young Special Correspondent nyusos@hankyung.com