USD/KRW to edge lower towards 1,160 as South Korea reaches full immunity – MUFG

The Korean won depreciated by nearly 2% against the US dollar in September, making an accumulative 9% year-to-date depreciation. South Korea now is in the middle of its worst wave of the pandemic but reaching full immunity will boost KRW in Q4, according to economists at MUFG Bank.

Positive developments in South Korea’s vaccination campaign

“With South Korea government’s aim of achieving 80% of its adults to be fully vaccinated by the end of October, and government’s plan to live ‘more normally’ with COVID-19 after October when the high vaccination rate is achieved, we expect some improvement in mobility and economic activities in Q4.”

“Potential further improvement in consumer confidence in light of higher vaccination rate will help boost consumption and render support for the overall economy and KRW in near term.”

“We expect KRW to appreciate against USD to 1160.0 for USD/KRW by Q4 2021.”