Hana Securities "Possibility of Further KRW-USD Exchange Rate Increase in First Half of 2025"

Trump Expected to Accelerate China Containment Policy
Early Trade Dispute Likely to Cause Won Depreciation

Hana Securities forecasted that there is a possibility of a further rise in the KRW-USD exchange rate in the first half of 2025. They analyzed that since the elected Donald Trump is likely to push for containment of China at a faster pace than during his previous term, the value of the Korean won could depreciate in the early stages of the trade dispute.

Jeon Gyu-yeon, a researcher at Hana Securities, stated, "The KRW-USD exchange rate will remain at a high level until the first half of 2025 due to the strong US dollar and the expansion of domestic investors' overseas investments. However, it will gradually decline in the second half as the Korean economy recovers, the interest rate differential narrows, and the short-term appreciation effect from inclusion in the WGBI takes place."

Hana Securities analyzed that there is a high possibility that the exchange rate will be weaponized if Trump is re-elected. Researcher Jeon said, "The timing of the KRW-USD exchange rate increase will vary depending on the policy priorities of the next US administration, but the intensification of trade disputes and the imposition of tariffs are factors supporting the strong dollar."

The fact that the US has re-designated Korea as a currency monitoring country adds weight to this view. Researcher Jeon pointed out, "This time, Korea met two conditions: a trade surplus with the US and a current account surplus, leading to its re-designation as a monitoring country. Although monitoring countries do not face special sanctions, if designated as a country for in-depth analysis, sanctions such as restrictions on US companies' investments and bans on access to US procurement markets may be imposed."

Over the past year, Korea was excluded from the monitoring list because it only met one of the three conditions for currency manipulation (trade surplus with the US, current account surplus, and foreign exchange market intervention), which was the trade surplus condition.

Researcher Jeon explained, "The exchange rate report hinted at the possibility of relaxing some of the criteria for designating countries for in-depth analysis, increasing the likelihood that the exchange rate will be used as a tool for trade pressure under the Trump administration. High tariffs and the exchange rate report could act as factors that increase imports from major countries to the US."

This content was produced with the assistance of AI translation services.