Commerzbank’s Moses Lim notes that higher Oil prices and heavy reliance on Middle Eastern crude have kept KRW volatile, with USD/KRW trading between 1,420 and 1,500 and the won down year-to-date. He expects the Bank of Korea to hold rates, focus on FX stability, and potentially smooth markets using ample reserves.

Hawkish guidance and FX smoothing ahead

"USD/KRW has fluctuated between the 1,420-1,500 range since December 2025."

"Year-to-date, KRW is down 1.8% against the dollar."

"BoK Deputy Governor Ryoo Sang-dai issued some hawkish guidance yesterday and warned that intervention risks are rising as BoK deems recent movements in the KRW as diverging from economic fundamentals."

"We expect BoK to engage in smoothening operations in both the onshore and offshore KRW market."

"We expect BoK to leave rates unchanged for the time being and adopt a wait-and-see attitude."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)