Amid the background of a 2.6% appreciation in the US Dollar Index, the Korean won fell 3.3% against the US dollar in August, the worst performer among EM Asia peers. Economists at MUFG Bank expect the USD/KRW pair to extend its upmove towards 1,370 by end-2022.

Strong USD to further weigh on KRW

“We see the USD/KRW remaining highly positively correlated with the US dollar index and negatively correlated with Korean equity markets this month.” 

“A strong US dollar and persisting risk aversion will likely further pressure the KRW lower in near term.”

“We see USD/KRW moving up to 1,370 by year-end.”