The South Korean Won (KRW) experienced a notable recovery, supported by a surge in exports and gains in technology equities, according to OCBC strategists Sim Moh Siong and Christopher Wong [1]. Domestic data revealed that exports rose by 78.3% year-over-year in the first 20 days of September, with semiconductor shipments soaring by 259% during the same period [1]. The trade surplus widened to USD 23 billion, further underpinning the KRW's strength [1].
Despite these positive data points, foreign equity flows remain inconsistent. Foreign investors turned net sellers of Korean equities on Monday in Asia, even as the KOSPI index posted gains [1]. Technical analysis indicates a bearish engulfing pattern and a rejection near the 1388 level in USD/KRW, suggesting near-term downside risk for the currency pair [1]. Support levels are identified at 1364 and 1350, while resistance is noted at 1388 and 1405 [1].
The strategists highlight that softer oil prices and a slower pace of US Treasury yield increases should continue to support the KRW in the near term [1]. However, they emphasize that a more sustained return of foreign buying is necessary for the KRW to establish a firmer footing [1]. Daily momentum remains bullish, but the RSI has eased from overbought conditions, and the bearish engulfing candlestick pattern warrants monitoring for further downside momentum [1].
CONCLUSION
The South Korean Won's recent strength is driven by robust export growth, particularly in semiconductors, and favorable market conditions. However, inconsistent foreign equity flows and technical signals suggest that sustained gains will depend on renewed foreign investor interest. Market participants should watch for follow-through in downside momentum and shifts in foreign buying activity.