FX.co ★ Korean Won Slides to Two-Week Low

The South Korean won declined to approximately 1,464 per dollar, wiping out gains made earlier in the week and reaching its lowest point in two weeks. This movement is attributed to ongoing domestic demand for US dollars, which continues to overpower official stabilization attempts. The slide in the won's value is indicative of structural capital outflows, as Korean retail investors are increasingly turning to US equities. As of January 29, overseas holdings soared to nearly $171 billion, with a notable uptick in US stock purchases further intensifying the pressure. This shift towards foreign assets has also elevated resident dollar deposits to an unprecedented $119.43 billion, diminishing the effectiveness of foreign exchange policy measures despite robust economic fundamentals and advancements in equity markets. Meanwhile, some concerns were alleviated due to improved economic projections. A report by the Korea Center for International Finance (KCIF) revealed that eight major global investment banks have adjusted their forecasts for South Korea’s growth in 2026 to 2.1%, an increase of 0.1 percentage point from last month. This figure surpasses the Bank of Korea’s estimate of 1.8% and the government’s projection of 2%, attributing the upgrade to a resurgence in the global semiconductor sector.