South Korean Won Set for Gradual Gains as Exports Surge and BoK Stays Hawkish, Commerzbank Says

South Korea's currency is poised for further, gradual strengthening as a semiconductor-driven export boom and a hawkish Bank of Korea combine to support the won, according to analysts at Commerzbank. The won has recently traded near its strongest level since July 2025, and the German bank argues that the underlying fundamentals justify continued, if measured, appreciation rather than a sharp move.

The optimism follows fresh trade data showing South Korean exports jumped 68.7% year-on-year in August, comfortably beating a consensus estimate of 62.6% and accelerating from an already robust 63% gain in July. It marked the 15th consecutive month of export expansion. Semiconductor shipments led the charge, soaring 209% year-on-year to roughly $46.7 billion, while computer exports rocketed 420% higher, underscoring how central the chip cycle has become to Korea's external accounts.

Commerzbank analysts described the figures as reinforcing the picture of an exceptionally strong, chip-driven external cycle, noting the trade surplus for August reached almost $35 billion. They also pointed to the Bank of Korea's decision to sharply upgrade its 2026 growth forecast to 3.3% from 2.6% previously, a revision the bank attributed largely to the export strength.

Beyond the trade numbers, Commerzbank flagged structural shifts in how Korea's external surplus feeds through to the currency. The analysts said corporate repatriation of overseas earnings and increased currency hedging by the National Pension Service mean a larger share of the trade windfall is now translating directly into won demand than in the past.

On monetary policy, the central bank delivered back-to-back 25 basis point rate hikes in July and August, and Commerzbank expects it to hold rates steady in October. Even so, the bank's tightening bias is likely to persist, the analysts said, since inflation remains above the Bank of Korea's 2% target and economic activity continues to run hot. Headline consumer prices rose 3.1% year-on-year in August, up from 2.8% in July, while core inflation climbed to 3.1% from 2.5%.

Having tumbled from around 1,550 per dollar at the start of July, USD/KRW is now expected to trade in a narrower 1,360–1,400 range in the near term, Commerzbank said, as the pace of won appreciation moderates from the sharp declines seen earlier in the year.