NextFin News - The South Korean won is poised for a potential recovery in the latter half of 2026, according to a senior trader at State Street, as the currency begins to find its footing following a period of intense volatility. The won, which briefly breached the psychologically significant 1,500 level against the U.S. dollar earlier this year—a depth not seen since the global financial crisis of 2009—has been under sustained pressure from a combination of aggressive U.S. dollar demand and shifting global trade dynamics.
Susie Kang, the head trader for South Korea at State Street, suggests that the currency may stabilize as foreign selling of Korean equities begins to taper off. Kang, who oversees regional trading operations for one of the world’s largest custodial banks, has historically maintained a pragmatic, data-driven stance on emerging market currencies. Her current outlook hinges on the expectation that the "worst is over" for the won’s depreciation, provided that global risk sentiment remains relatively stable and the Bank of Korea continues its cautious policy path. However, it is important to note that this perspective currently represents a minority view within the broader institutional landscape, as many sell-side analysts remain wary of persistent dollar strength and geopolitical headwinds.
The won’s trajectory in 2026 has been defined by a sharp divergence between domestic economic resilience and external financial shocks. In March, the currency’s slide past 1,500 per dollar triggered concerns about capital flight, yet the Bank of Korea has managed to maintain a steady hand, recently upgrading its 2026 growth forecasts even as it held interest rates steady. This domestic optimism provides a fundamental floor for the currency, but the "Trump trade" and the potential for a 15% global tariff hike—a policy proposal currently circulating in Washington—continue to cast a long shadow over export-dependent economies like South Korea’s.
From a technical standpoint, the stabilization Kang anticipates would require a significant shift in institutional positioning. State Street’s own Risk Appetite Index showed a surge in demand for risky assets in April, suggesting that the extreme "risk-off" sentiment of the first quarter may be exhausting itself. If global investors begin to rotate back into Asian tech and semiconductor stocks, the won would be the primary beneficiary of those inflows. Yet, this remains a scenario-based projection rather than a certainty; the persistent 0.9% monthly inflation rise in the U.S. reported by State Street PriceStats suggests that the Federal Reserve may keep rates higher for longer, maintaining the dollar's yield advantage.
The primary risk to this recovery thesis lies in the volatility of global trade policy. While Kang sees a path to stabilization, a renewed escalation in tariff rhetoric or a sudden slowdown in the global AI-driven semiconductor cycle could easily derail the won’s rebound. For now, the market remains divided: while some see the 1,500 level as a definitive bottom, others caution that without a clear pivot from the U.S. Treasury or a cooling of inflationary pressures, the won’s path of least resistance may still be sideways at best.
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