South Korea’s won weakened after the U.S. midterm elections and foreign investors sold domestic equities, despite overseas investment banks forecasting a large current-account surplus supported by strong semiconductor exports. Eight investment banks forecast this year’s surplus at an average 19.4% of GDP, while dividend repatriation by Samsung Electronics and SK Hynix could add to dollar demand late in the year.
A sustained export-driven surplus could support won demand, while foreign equity outflows and dividend remittances increase demand for dollars. The immediate currency pressure is toward a higher USD/KRW rate, although strong semiconductor receipts could help limit the move.
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