Invest1 publisher2 min readPublished
Surveyed FX forecasters put Korea's ideal won 33 to 58 won stronger than the market's close
A Seoul Economic Daily poll of 20 foreign exchange specialists puts the level that would steady Korean growth and inflation in the low 1,300s. The question it asked was what level is appropriate.
The Investor · Invest desk
What happened
- The Seoul Economic Daily polled 20 foreign exchange experts on the 20th, an urgent survey run after consecutive rate increases in the United States and Japan.
- Seven respondents, the largest single group, picked 1,300 to 1,350 won per dollar as the appropriate level, and four picked 1,350 to 1,400.
- Respondents also warned that if the won strengthens too quickly, exporters face greater strain on price competitiveness and heavier currency-hedging burdens.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- contradiction The same panel prefers the low 1,300s and expects the Bank of Korea to leave the base rate unchanged in October, after the United States and Japan raised theirs. The survey does not say what would carry the won that far while Korea holds.
- exposure Importers and households are the intended beneficiaries of the preferred level, since the panel judged that at current levels lower import prices and higher real household income outweigh the damage to corporate exports and earnings.
- constraint An exporter that budgets on 1,350 is betting on the view of 20 newspaper-surveyed forecasters. An opinion is something a hedging committee can argue with; it binds nobody to a level.
Spot on the 18th was 1,383.3 won to the dollar in daytime trading, edging toward 1,400 [4]. The weak edge of the band the largest group picked, 1,350, is 33.3 won stronger than that close, or 2.4% [11]. The band's midpoint, 1,325, is 58.3 won and 4.2% stronger [12]. An exporter that invoices in dollars and pays wages in won hands over that share of its won receipts per dollar shipped.
Measured against the same close, eleven of the published answers name a stronger won: the seven in the modal band, three at 1,250 to 1,300, and one at 1,200 to 1,250 [2][5][13]. Four name 1,400 to 1,450, which is weaker [5]. The five bands add up to 19 of the 20 respondents [14]. End to end, the range the panel calls appropriate runs from 1,200 to 1,450, a spread of 250 won, or 18% of the 18th close [17].
The survey named one of its respondents. Kang Hyun-joo, a senior research fellow at the Korea Capital Market Institute, said appreciation of the won eases upward pressure on import prices and boosts households' real purchasing power at a time when global oil prices are high [6].
Everyone answering is a market or institute forecaster [1]. What they gave is a view on what level suits the economy. A treasurer setting a 2027 budget has to hedge to a number.
Nineteen of the twenty called won strength positive or neutral for the domestic economy [16]. Among the forecasters in this poll, the constituency for a weaker currency is one person. I'd put more weight on that split than on the modal band, because a 19-to-1 lean tells you which way Korean research will read a break through 1,400 [4], and a preference distribution 250 won wide [17] is too broad to plan around. The counter-case sits in the same survey: four respondents put the appropriate rate above 1,400 [5], and Kang's import-price argument holds only while oil is expensive [6].
What to watch
- The Bank of Korea's October decision: four of the 20 expect an increase, and a hike would give the preferred band a policy path.
- Any finance ministry or central bank statement that names a level. That would make the low 1,300s more than a survey answer.
- A spot break through 1,400, after the 18th close at 1,383.3.