Foreign Currency

Navigating choppy waters: Dollar-won FX forecasting  

Hana Bank dealing room with an electric board showing that the US dollar ended at 1,375.30 won on April 26, 2024 

Most market analysts and economists late last year when the Korean won traded at 1,288 per dollar forecast the Korean currency would regain ground against the US dollar to the 1,200 level in the second quarter this year from the low 1,300 level in the first quarter, but such prevalent forecasting was found to be wrong.

Worse yet, it is getting more challenging to project the pair’s move amid growing uncertainties about the US Federal Reserve’s rate decision amid stubborn inflation and increasing geopolitical risks in the Middle East.

The Korean currency skidded to a 17-month low on April 16, briefly touching the psychologically important 1,400 per dollar level. That level was never mentioned among financial institutions forecasting the dollar-won exchange rate last year.

Reflecting expectations for the Fed’s rate cuts up to six times this year starting in March, Korea Investment & Securities Co., Meritz Securities Co., Hana Bank, Shinhan Bank and NH Futures Co. projected the dollar-won rate at a 1,290-1,350 range in the first quarter and then at a 1,270-1,300 range in the second quarter.

Foreign banks such as Goldman Sachs, Morgan Stanley and Nomura also forecast similar.

Money exchange shop in Myoengdong, Seoul (Courtesy of Yonhap)

Only NH Investment & Securities Co. and Woori Bank predicted differently as they factored in other variables such as the US economic fundamentals as more important issues.

NH Investment published a report in November last year projecting that the won would average at 1,320 per dollar in the first quarter and then 1,360 in the second quarter, similar to the average rate of 1,368.17 from April 1 to 26.

“The US is expected to restore its hegemony power with technology development and investments in growth industries,” Kwon Ah-min, an economist at NH Investment, said in the report. “Considering the rate gaps with other countries and headline inflation, the anticipated Fed rate cut won’t be enough to weaken the dollar.”

Woori Bank also forecast the won would trade at 1,350 per dollar in the first quarter and then 1,360 in the second quarter, saying expectations for the Fed’s early rate cuts were exaggerated.


Besides the US rate move, other unexpected issues have affected the dollar-won move.

Late last year, not many people predicted Israel’s military campaign against Gaza would last this long, causing massive casualties and posing a threat to the global economy.

Reflecting the issue, financial institutions have recently tweaked their forex forecasting this year.

Bank of Korea (Courtesy of Yonhap)

But the US gross domestic product (GDP) growth for the first quarter ended in March came below market expectations, stoking concerns about the US economy, while Korea’s economy showed a more resilient move in the same quarter.

Korea’s GDP for the January-March quarter was 1.3% higher than the prior quarter on a seasonally adjusted basis, the sharpest expansion since the fourth quarter of 2021, data from the Bank of Korea (BOK) showed on Thursday.

In the previous quarter, the country’s GDP expanded 0.6%.

The two countries’ GDP scores may lead to appreciation of the Korean currency against the greenback.

“There are so many variables we have to factor in when forecasting foreign exchange rates,” said an FX analyst. “It is very challenging to project it now.”

NH Investment forecast the won will average at 1,370 per dollar in the third quarter, while Woori forecast 1,330.

(Courtesy of News 1 Korea) 


With the increasing volatility in the foreign exchange market, foreign exchange trading at Korean banks in the first quarter zoomed due to high hedging demand.

According to the BOK data on Friday, daily foreign exchange trading in the January-March quarter hit $69.40 billion, up 9.6% from the previous quarter.

This was also the highest-ever quarterly figure since the related data started to be compiled in 2008. The previous record was $69.37 billion in the second quarter of last year.

“Demand for hedging with forex increased after the won weakened to 1,347 per dollar at the end of the first quarter (of this year) from 1,288 at the end of the fourth quarter (of last year),” according to the BOK.

Korean retail investors’ overseas equity investment also jumped to $128.3 billion in the quarter ended March from $91.4 billion in the prior quarter.

Write to Jin-gyu Kang at
Sookyung Seo edited this article.

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