Asia's Best-Performing Currency Is Set to Be Revamped

Choi Kyungjin is the Seoul-based head of fixed income and currencies at Deutsche Bank AG. According to him, if weak markets at the end of the year add to volatility, the won might go as low as 1,380 per dollar in the first quarter. Choi predicts that it will reach $1,100 per dollar next year. Even if their victory falls to 1,350, Choi believes it would be a “very favorable level” to acquire the currency.

Won went from the poorest to the greatest performer in Asia in a quarter. Bets that the US Federal Reserve would decrease the pace of rate hikes have boosted emerging-market currencies like the won. The FTSE World Government Bond Index is scheduled to debut in March 2023. If Korea is included, it will draw up to 90 trillion won ($68.6 billion) in foreign resources. As a result, the won may gain even more ground.

Uncertainty May Still Loom Among Won Signals

The stock market is riddled with uncertainties. Choi said that this might entail reduced semiconductor pricing as well as a downturn in China, South Korea's key export market. Despite a 9% quarterly increase, the win was still more than 9% weaker than the dollar in 2022.

Deutsche Bank plans to make roughly $1,300 per dollar next year. The Fed's and the European Central Bank's hawkish policies impacted risk appetite in the region.

Inflation is decreasing, and a recession is expected to strike the United States and Korea in 2023. This paints a more positive image of Korean sovereign bonds for Choi. Despite the government's attempts to alleviate some of the pressure, he thinks Korea's economy would continue to suffer from credit and housing market issues.

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