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 KRW-USD exchange rate forecast for the next three months by the 12 investment banks was 1,440 won. Standard Chartered and Nomura presented the highest forecasts at 1,460 won, while HSBC gave the lowest forecast at 1,400 won.

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

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

The twelve-month forecast averaged 1,424 won. For the next twelve months, Bank of America (BoA) forecast 1,395 won, Goldman Sachs projected 1,390 won, and Nomura predicted 1,380 won. However, most forecasts expected the rate to stay in the low to mid-1,400 won range. Barclays Capital gave the highest forecast at 1,490 won. Global investment banks also appear to be distancing themselves from the idea of the exchange rate surpassing 1,500 won.

These IB forecasts were mostly presented from late November to early December. As the foreign exchange authorities took active measures to lower the closing exchange rate ahead of the year-end market closure, and with the exchange rate plunging for two consecutive days on the 24th and 26th, excessive expectations for a weaker won have been tempered, 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 the confirmation of $350 billion in investments in the United States, the current mid-1,400 won exchange rate remains excessively high.

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