Korean won achieves its longest consecutive increase in 13 years! The AI boom and influx of foreign investment help it become the best-performing currency in Asia.

The South Korean won is expected to hit its longest streak in 13 years, largely due to the market's fervent optimism towards the artificial intelligence industry and the accelerated inflow of funds triggered by the inclusion of key bond indices. According to the latest data, on Thursday, the South Korean won against the US dollar exchange rate rose by 0.8%, reaching a high of 1425.25, marking the seventh consecutive trading day of gains - the longest uptrend since January 2013, making it the best-performing currency in Asia that day. Behind this strong performance is the significant increase in profits brought by Samsung Electronics (SSNLF.US), improving export prospects, further strengthening market confidence in the fundamentals of the South Korean economy. It is understood that this rise coincides with an increase in foreign investors buying local assets in South Korea, with $2.8 billion in stocks and $3.5 billion in bonds bought so far this year. Despite South Korean bonds being included in the FTSE Russell World Government Bond Index in April, market reforms and positive sentiment towards AI-related companies are attracting funds into the stock market. It is worth mentioning that benefiting from the strong growth of tech giants in the global artificial intelligence and Siasun Robot & Automation trend, the market capitalization of the South Korean stock market has exceeded that of Germany. As of Wednesday data, since the beginning of 2025, the South Korean stock market valuation has risen to $3.25 trillion, a significant increase of about $1.7 trillion from the beginning of the year, surpassing Germany's $3.22 trillion, propelling South Korea to the world's tenth largest stock market. "The fundamentals of South Korea indicate that the South Korean won against the US dollar exchange rate will strengthen throughout 2026," said Michael Wan, a senior foreign exchange analyst at MUFG Bank Ltd. He also mentioned that the yen has been a key driving factor, sparking questions about whether there will be interventions in the South Korean won, either unilaterally or in coordination with US authorities. Wan predicts that by the end of 2026, the exchange rate of the South Korean won against the US dollar will appreciate to 1385 won per dollar. The Bank of Korea has been closely monitoring fluctuations in the foreign exchange market recently and decided earlier this month to maintain the benchmark interest rate unchanged, mainly due to the consideration of the continuous pressure on the South Korean won's demand for US dollars. It is notable that Bank officials, including Governor Lee Chang-ryong, have pointed out that strong demand from retail investors for overseas stocks is one of the key factors dragging down the performance of the South Korean won recently. In late December, the South Korean Ministry of Finance announced a comprehensive plan, combining tax incentives and hedging measures, aimed at addressing the supply-demand imbalance in the foreign exchange market. Among the measures is the establishment of new tax incentives for "repatriation investment accounts" to encourage capital inflows from overseas investments back into the domestic market.