Usdkrw Best Asian Currency During Q4

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Usdkrw Best Asian Currency During Q4

USD/KRW - Best Asian Currency During Q4

According to MUFB economists, the USD/KRW will become one of the best currencies in the Asian region during Q4 2023. By the end of September 2023, the USD/KRW has already reached its 10-month high and is now en route to touching a yearly high.

In South Korea, a recovery is seen in the chips export, which will allow the country to further build up its FX reserves. Similarly, the uptick in exports will also allow the South Korean currency (KRW) to trade higher against the US Dollar.

As per the MUFB analysis, a modest strength in the KRW will be seen during Q4 2023. Since the USD/KRW is already at a high level, any appreciation in KRW means the USD/KRW will go lower in the next 3 months.

KRW To Appreciate During Next Few Months

For now, the market is dominated by a high US interest rate as well as a stronger greenback, which is the main reason why USD/KRW reached such a high level in the first place.

But if we look at the MUFB Bank analysis, it appears that the upside in the USD/KRW may be reaching its end. After all, Q4 2023 has already started, and the exports of chips from South Korea are already on the rise.

During the early few months of 2023, chip exports coming from South Korea went through a slump. However, that has changed as the exports are now recovering, and there is also a strong demand for chips.

One of the biggest benefits of the stronger AI investment is that it also drives up the chip demand. Since South Korea is a major hub of chip production, it also stands to gain the most from the AI boom.

In a sense, we can say that the AI boom and the KRW appreciation are tied together, and that's exactly what we see in Q4 2023.

In Q4 2023, the USD/KRW will trade near 1330, and during Q1 2024, the pair will be trading at 1320. Similarly, the USD/KRW forecast for the Q2 2024 is set to be near 1290.

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