Key Moments
- DBS Group Research points to Korea’s strong September export growth, led by AI-driven semiconductor demand and a record monthly trade surplus.
- The Korean Won is viewed as fundamentally supported, but its previous third-quarter gains are not expected to be repeated.
- Neutral KRW valuation and the potential for increased portfolio outflows as hedging activity fades are flagged as key constraints.
Export Strength and Semiconductor Momentum
Chang Wei Liang at DBS Group Research highlights Korea’s strong September export performance, driven by an AI-led semiconductor boom and a record monthly trade surplus. While this backdrop should support the Korean Won (KRW), he cautions that KRW may not repeat its third-quarter gains as valuation has turned neutral and portfolio outflows could rise as hedging activity fades.
Detailed Trade and Export Metrics
The latest data point to a powerful upswing in external demand, particularly in semiconductors. Key figures cited by DBS are as follows:
| Indicator | Period | Value | Comparison / Expectation |
|---|---|---|---|
| Total exports growth (y/y) | September | 83.5% | exp: 62.5%, Aug: 68.7% |
| Semiconductor exports growth (y/y) | September | 263% | Aug: 209% |
| Monthly trade surplus | September | USD50bn | Aug: USD35bn; another record high |
Unchanged Quotes from DBS Group Research
“Korea’s Sep exports beat expectations again, rising by 83.5% y/y (exp: 62.5%, Aug: 68.7%).”
“The AI-led semiconductor boom exhibits no slowing in momentum, with semiconductor exports surging 263% y/y, up from an already massive 209% gain in Aug.”
“The trade surplus also jumped to USD50bn in Sep from USD35bn in Aug, marking another record high monthly trade surplus.”
“While we think the solid export performance should support the KRW, we don’t necessarily see the KRW repeating its Q3 gains as the KRW DEER valuation has turned neutral, and portfolio outflows are likely to pick up as hedging activity fades.”
Implications for the Korean Won
DBS Group Research indicates that the strong export and trade figures provide a positive backdrop for KRW. However, the assessment notes that with KRW’s DEER valuation now described as neutral, the currency may not replicate its earlier gains. The analysis also flags the possibility that portfolio outflows could increase as existing hedging flows diminish, which could temper further appreciation of the Korean currency despite the robust trade data.
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