Seoul forex market dealers forecast the USD/KRW exchange rate to fluctuate around the mid-1,460 won range on May 28. International oil prices continued declining after the US and Iran halted airstrikes over the weekend, though investor sentiment contracted again centered on semiconductors. Dealers expect month-end exporter negotiation supply to emerge at upper levels, while custody buying demand is anticipated to support the lower bound after foreigners net sold nearly 3 trillion won in Korean stocks the previous day, with market participants awaiting the two-day FOMC meeting starting tonight.
Market Factors Influencing USD/KRW Exchange Rate
International oil prices maintained a downward trend following the cessation of airstrikes between the US and Iran over the weekend. Market investment sentiment showed renewed contraction centered on the semiconductor sector. Dealers noted that as month-end approaches, exporter negotiation volumes may be released at upper levels, but custody buying flows are expected to firmly support the lower bound amid substantial foreign stock selling.
In the New York NDF market, the USD/KRW 1-month contract closed at 1,464.60 won (MID). Considering the recent 1-month swap point of +0.15 won, this represents a 4.05 won decline from the previous day's Seoul forex market spot close of 1,468.50 won. Market observers noted that anticipation of the FOMC regular meeting, which begins tonight and runs for two days, may limit volatility as participants maintain a wait-and-see stance.
Bank Dealer Forecasts for May 28
An A bank dealer stated that upward pressure centered on the late 1,460 won range is expected to prevail due to risk-averse sentiment, global dollar strength, and settlement demand. However, the dealer noted that exporter negotiation volumes approaching month-end and dollar supply related to SK Hynix ADR are expected to limit the exchange rate's upper range. The dealer provided a forecast range of 1,460.00-1,473.00 won.
A B bank dealer indicated that despite a significant drop in international oil prices, dollar strength continues as the perception persists that the Federal Reserve will be more hawkish than other major central banks. Considering the possibility of foreign equity capital outflows following the sharp overnight decline in semiconductor stocks, the won is expected to face depreciation pressure. The dealer provided a forecast range of 1,460.00-1,473.00 won.
A C bank dealer noted that easing Middle East tensions, the previous day's shift of ultra-short-term swap points to positive territory, and the dominance of dollar supply within the region represent downward factors for USD/KRW. However, the dealer observed that foreign net selling of domestic stocks will limit the exchange rate's lower bound. The dealer provided a forecast range of 1,458.00-1,470.00 won.
The overall predicted range for USD/KRW on May 28 was 1,458.00-1,473.00 won.
FAQ
What is the USD/KRW exchange rate forecast for May 28?
Seoul forex market dealers forecast the USD/KRW exchange rate to fluctuate around the mid-1,460 won range on May 28, with a predicted range of 1,458.00-1,473.00 won.
Why are dealers expecting upward pressure on the USD/KRW exchange rate?
Dealers cited risk-averse sentiment, global dollar strength, settlement demand, and the perception that the Federal Reserve will be more hawkish than other major central banks as factors creating upward pressure on the exchange rate.
What factors are expected to limit the USD/KRW exchange rate's upside?
Month-end exporter negotiation volumes, dollar supply related to SK Hynix ADR, and custody buying demand are expected to cap the exchange rate's upper range.
