"Increase in Ants' Overseas Investment Drives Won-Dollar Exchange Rate Rise"

Hana Securities analyzed on the 31st that the increase in overseas investment by domestic investors could lead to a rise in the KRW-USD exchange rate.

Jeon Gyu-yeon, a researcher at Hana Securities, said, "Currently, the interest rate gap between the US and the Eurozone is expected to widen toward the end of the year, which is likely to support the strength of the dollar. Among the currencies that make up the dollar index, the Japanese yen is likely to strengthen in the second half of the year due to the Japanese government's declaration of escaping deflation and the possibility of the Bank of Japan (BOJ) raising interest rates in the fourth quarter. However, the BOJ's tightening capacity is limited, so it is not enough to change the dollar's trend."

The researcher explained that following the trend of the US dollar's strength due to global benchmark interest rate movements, domestic investors' supply and demand will also affect the exchange rate. He pointed out, "The increase in overseas investment by domestic investors seems to induce a rise in the KRW-USD exchange rate. Since the beginning of this year, the scale of overseas stock and bond investments has increased, centered on asset management companies, insurance companies, and individual investors. In particular, individual investors have expanded their demand for dollars by increasing overseas stock investments, especially in technology-related stocks."

He added, "It is necessary to keep in mind that the KRW-USD exchange rate may periodically rise while optimistic views on the global stock market are maintained. For the time being, the KRW-USD exchange rate in the 1300 won range is considered the new normal. Under the current circumstances, the KRW-USD exchange rate is expected to be around an annual average of 1,357 won."

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