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KRW has been volatile. After spiking to a high of 1,294 in March, USD/KRW has been trading in a range of 1,190–1,210 most of the time, supported by persistent risk of another wave of infection, an economic slump and massive equity outflows. Looking ahead, economists at ANZ bank see a gradual appreciation path for KRW against USD into 2021, helped by an export rebound and further USD weakness. 

Key quotes

“We think the worst is behind us. After containing the first wave, the government has been able to keep new infections under control. There are signs of a modest recovery in exports. The trade surplus has been restored, and equity outflows have eased. We expect sequential growth in GDP to turn positive in Q3. Indeed, we think South Korea is well positioned for any rebound in global demand.”

“On monetary policy, the central bank has signalled the end of the rate-cut cycle. Instead, we expect the central bank to use non-rate tools including bond purchases and targeted measures to ease funding pressure. Helped by further USD weakness, we expect USD/KRW to end 2020 at 1170.”