Seoul forex dealers forecast the Korean won will face depreciation pressure on May 22 due to unresolved Middle East geopolitical tensions, but dollar selling from exporters and foreign stock purchases will cap exchange rate gains. Persistent US-Iran conflict emerged as the primary driver of won weakness, with Brent crude futures closing above $91 per barrel for the first time in a month and USD/JPY trading above 163 yen for the first time in 40 years. Three bank dealers provided USD/KRW trading range forecasts between 1,474.00 and 1,488.00 won, citing competing forces of geopolitical risk and domestic dollar supply.
Market Drivers Behind Won Weakness Forecast
Brent crude futures closed above $91 per barrel, marking the first close in the $90 range in a month, while USD/JPY traded above 163 yen for the first time in 40 years. Export firms' dollar supply and foreign net buying of Korean stocks were identified as factors limiting upward exchange rate movement. The Nasdaq Composite Index rose 1.29% overnight in New York trading, and the Philadelphia Semiconductor Index surged 5.21%. In the New York non-deliverable forward (NDF) market, the USD/KRW 1-month contract was last quoted at 1,482.00 won (MID), representing a 9.40 won increase from the Seoul close after adjusting for the recent 1-month swap point of -0.80 won.
Dealer Forecasts for USD/KRW Trading Range
A bank dealer stated that unresolved Middle East geopolitical risks and US alternative tariff issues pushed the dollar index higher, with USD/JPY strength creating upward pressure on the exchange rate. The dealer noted that while macro factors matter, recent market movements have been heavily influenced by supply and demand dynamics, forecasting a range of 1,474.00~1,486.00 won. B bank dealer highlighted oil price increases as a dollar strength factor and won weakness driver, but cited expanded dollar supply and Japanese authority intervention concerns as factors supporting the upper limit, forecasting 1,475.00~1,488.00 won with expectations of a rise to the low-to-mid 1,480s. C bank dealer pointed to heightened geopolitical tensions and rising US Treasury yields as exchange rate increase factors, with potential alignment with yen weakness, but noted that continued foreign net buying of Korean stocks and dollar selling volume would constrain the upper range, forecasting 1,475.00~1,485.00 won.
FAQ
What factors are driving won weakness on May 22 according to Seoul forex dealers?
Seoul forex dealers identified unresolved Middle East geopolitical tensions, specifically persistent US-Iran conflict, as the primary driver of won depreciation pressure on May 22. Supporting factors include Brent crude futures closing above $91 per barrel for the first time in a month and USD/JPY trading above 163 yen for the first time in 40 years.
What is the forecasted trading range for USD/KRW on May 22?
Three bank dealers provided USD/KRW trading range forecasts for May 22: A bank forecast 1,474.00~1,486.00 won, B bank forecast 1,475.00~1,488.00 won, and C bank forecast 1,475.00~1,485.00 won. All dealers cited dollar selling from export firms and foreign net buying of Korean stocks as factors capping the upper limit despite geopolitical risks.
