South Korean and Taiwanese currencies eye consolidation amid strong export growth

Commerzbank analysts project a period of consolidation for both the South Korean Won and the Taiwan Dollar against the US Dollar, driven by strong export performance and significant current-account surpluses.

In South Korea, the Won has seen substantial appreciation, gaining over 12% against the Dollar since late June. This strength is attributed to large current-account surpluses and a shift in how funds are recycled, including increased hedging by the National Pension Service and corporate repatriation following US listings by major semiconductor firms. While the Bank of Korea may consider further tightening, analysts expect the USD/KRW to consolidate within the 1,350-1,400 range as recent appreciation already tightens financial conditions.

In Taiwan, the currency is supported by booming AI-related exports and robust GDP growth, which saw a 12.9% year-on-year expansion in Q2. Despite this growth, the Central Bank of the Republic of China is expected to maintain interest rates at 2% and continue intervening to smooth volatile capital flows and prevent excessive appreciation. The USD/TWD is expected to trade within a consolidation range of 31.50-32.00.