South Korea's economic envoy Lee Jae Myung forecasts stabilization of the won within the next two months, citing resilient foreign exchange reserves and improved capital inflows. The currency has shown signs of recovery after recent depreciation pressures.
- Foreign exchange reserves remain above $430 billion
- Won depreciated 6.8% in Q4 2025 before rebounding
- Monthly equity inflows averaged $1.2 billion since December 2025
- Semiconductor exports grew 14.3% YoY in November 2025
- Bank of Korea rate hike probability stands at 62% in February 2026
- Top three Korean stocks gained $28 billion in market cap over one month
South Korean economic policy chief Lee Jae Myung announced on January 21, 2026, that the won is holding firm against global market headwinds and could stabilize by early March. His remarks come amid heightened volatility in emerging market currencies following shifts in U.S. Federal Reserve policy and geopolitical tensions in East Asia. Lee emphasized that foreign exchange reserves have remained above $430 billion, a level considered sufficient to absorb short-term shocks. The won depreciated nearly 6.8% against the U.S. dollar in the last quarter of 2025, triggering central bank intervention. However, since mid-December 2025, monthly capital inflows into South Korean equities have averaged $1.2 billion, a reversal from the outflows observed earlier in the year. This improvement is attributed to stronger-than-expected exports in semiconductors and electric vehicles, which grew 14.3% and 19.7% respectively in November 2025 compared to the prior year. Market participants now anticipate a potential rate hike by the Bank of Korea in February 2026, with current futures pricing indicating a 62% probability. The move would reinforce the won’s appeal as a high-yield currency amidst global monetary tightening cycles. Investors in Samsung Electronics (005930.KS), SK Hynix (000660.KS), and Hyundai Motor (005380.KS) have responded positively, with their combined market cap increasing by $28 billion over the past month. The outlook for the won is closely watched by regional markets, particularly Japan and Taiwan, where currency managers are assessing whether similar interventions will be necessary. A stabilizing won supports broader financial stability in Northeast Asia and reduces risks of contagion in bond and equity markets.