Twelve Global Investment Banks Forecast KRW-USD Exchange Rate at 1,440 Won for the Next Three Months

Twelve global investment banks (IBs), including Standard Chartered and Nomura, have forecast that the KRW-USD exchange rate will remain at an average level of 1,440 won over the next three months. The average exchange rate for the next year was projected at 1,424 won. This suggests that an exchange rate in the 1,400-won range is becoming the 'new normal'.

Yonhap News Agency

According to the financial investment industry on the 28th, the average forecast for the KRW-USD exchange rate over the next three months by the 12 investment banks was calculated at 1,440 won. Standard Chartered and Nomura presented the highest forecasts at 1,460 won. The lowest forecast was from HSBC at 1,400 won.

The six-month forecast averaged 1,426 won. This suggests that the exchange rate will remain at the level of this year's average rate (1,421.9 won), based on weekly closing prices as of the 26th.

For the highest forecasts, Barclays Capital, Wells Fargo, and Standard Chartered each projected 1,450 won, while JP Morgan and Societe Generale presented the lowest forecasts at 1,400 won.

The 12-month forecast averaged 1,424 won. Although Bank of America (BoA) forecast 1,395 won, Goldman Sachs 1,390 won, and Nomura 1,380 won for the next 12 months, most opinions indicated the rate would remain in the low to mid-1,400 won range. Barclays Capital presented the highest forecast at 1,490 won. Global investment banks also appear to be distancing themselves from the possibility of the rate surpassing 1,500 won.

These IB forecasts were mostly presented between late November and early December. As the foreign exchange authorities actively moved to lower the closing exchange rate ahead of the year-end foreign exchange market closure, and with the exchange rate plunging for two consecutive days on the 24th and 26th, excessive expectations of a weak won have been dampened, leaving room for downward adjustments.

According to the International Monetary Fund (IMF)'s recent 'External Sector Report', the appropriate KRW-USD exchange rate as of last year was estimated to be in the 1,330-won range. Even considering changes in conditions, such as confirmation of $350 billion in investments in the United States, the current mid-1,400 won exchange rate is considered excessively high.

A financial industry official stated, "Although the IMF will recalculate the appropriate exchange rate for this year, even if it is revised upward, it will likely remain in the low to mid-1,300 won range."