Investment bank Goldman Sachs revised its forecast for the South Korean won towards strengthening. Analysts point to the trade surplus and capital repatriation as key factors.
Investment bank Goldman Sachs has updated its forecast for the South Korean won, making it more positive. According to analysts, in the medium term the currency may strengthen and fall below the 1300 mark against the US dollar.
As the main reasons, the bank cites South Korea's significant trade surplus and the high level of capital return to the country. These factors are expected to put pressure on the exchange rate towards strengthening. At the same time, the Bank of Korea may start accumulating foreign exchange reserves at the level of 1300, which will limit further growth of the won.
Recent comments by the head of the Bank of Korea, Shin, also indicate a possible allowance for currency strengthening below current levels. This week he noted that the exchange rate around 1330 remains weak by historical standards. According to him, further strengthening of the won would be desirable, as it would increase the purchasing power of households.
At Goldman Sachs, they believe that the regulator's statements indicate the absence of a hard limit near recent values. Previously introduced measures allowing the National Pension Service to reduce hedge positions are likely aimed primarily at controlling the speed of the won's strengthening, rather than completely restraining it.
Thus, Goldman Sachs' position reflects a change in market expectations regarding the South Korean currency against the backdrop of favorable macroeconomic factors.